Fed Rate Cut by December 2026: Odds & Probability
Prediction markets price a 20.5% probability that the Federal Reserve will cut its target federal funds rate by the December 2026 FOMC meeting. By contrast, the chance of a cut by the January 2026 meeting sits at 0.0%.
Fed rate cut by December 2026 meeting?
Updated · Volume $2.8M
| Outcome | Probability | 24h |
|---|---|---|
| Fed rate cut by December 2026 meeting? | 20.5% | 0.0 |
| Fed rate cut by October 2026 meeting? | 10.8% | -1.2 |
| Fed rate cut by September 2026 meeting? | 3.8% | -0.2 |
| Fed rate cut by July 2026 meeting? | 0.7% | 0.0 |
| Fed rate cut by April 2026 meeting? | 0.0% | — |
| Fed rate cut by March 2026 meeting? | 0.0% | — |
| Fed rate cut by June 2026 meeting? | 0.0% | — |
| Fed rate cut by January 2026 meeting? | 0.0% | — |
Probabilities for a rate cut by early- to mid-2026 meetings are essentially zero. The odds climb to 11.8% by October 2026 and double to 20.5% by December, though even the latter leaves an 80% chance of no cut.
Context
This market tracks expectations for when the Federal Reserve might lower the upper bound of its target federal funds rate. The resolution depends on whether a cut—scheduled or emergency—is announced between 16 December 2025 and a specific FOMC meeting, as set out in each contract. The data here covers eight different meeting dates, from January 2026 through December 2026. Traders currently see almost no prospect of a cut in the first half of 2026. The odds for the March, April, June, and July meetings all stand at 0.0% or a rounding’s breadth away (0.6% for July). The September meeting rises only to 3.3%. This near-uniformity at the low end suggests a strong conviction that the Fed will hold rates steady through at least the summer. By the autumn, probabilities begin to creep up. The October meeting reaches 11.8%, and December 2026 jumps to 20.5%. That step-up is consistent with a market that assigns a roughly one-in-five chance of a cut materialising in the final months of next year, but not earlier. The gap between October and December—nearly nine percentage points—shows that traders assign a substantially higher probability to a cut at the later meeting. The total volume across these linked markets is about $2.75 million, indicating a moderate level of interest. While a 20.5% probability is far from a sure thing, it is significantly higher than the near-zero readings earlier in the year, suggesting that some participants expect the current rate plateau to end by late 2026.
FAQ
What exactly does this market predict?
It estimates the chance that the Federal Reserve will lower the upper bound of its target federal funds rate between 16 December 2025 and a given FOMC meeting. Each outcome refers to a different meeting date.
Why is the January 2026 probability 0%?
The market covers any cut announced after 16 December 2025. With the January meeting concluding on 28 January 2026, the window is very short, and traders see virtually no chance of a cut occurring in that period.
How are these probabilities determined?
They come from prediction markets where participants buy and sell shares tied to the outcome. Prices reflect the collective judgment of traders, translating into implied probabilities.
Do these numbers mean a cut is expected by December 2026?
A 20.5% probability means the market thinks a cut is more likely not to happen than to happen. It signals a slim chance, not an expectation.
What counts as a rate cut?
Any decrease in the upper bound of the target federal funds rate, whether at a scheduled FOMC meeting or via an emergency decision, qualifies if it falls within the specified window.
Data: Polymarket · Methodology · Not financial advice