Updated July 14, 2026
Where are interest rates headed next, and what are markets pricing after the Federal Reserve’s latest decision?
Fed interest rate prediction markets offer a fast-moving way to follow expectations around U.S. monetary policy. Rather than relying only on analyst forecasts or economic models, these markets turn the views of traders into probabilities around potential Federal Reserve decisions.
That does not make them a crystal ball. But when inflation data, employment reports, or Federal Reserve communications change the outlook, prediction markets can show how expectations are moving in real time.
Last updated: August 7, 2026. Prediction-market prices and rate expectations can change quickly.
The Federal Reserve held the federal funds target range at 3.50%–3.75% following its July 28–29, 2026 meeting.
The decision itself was expected. The voting split was much more notable.
The Federal Open Market Committee approved the decision by a 9–3 vote, with Beth Hammack, Neel Kashkari, and Lorie Logan preferring to raise rates by 25 basis points. That showed there is meaningful support within the Fed for tighter monetary policy while inflation remains above the central bank’s 2% target.
The next scheduled FOMC meeting is September 15–16, 2026.
However, the case for a September rate hike weakened following the July employment report released on August 7.
U.S. nonfarm payrolls fell by 23,000 in July, while the unemployment rate edged down to 4.1%. Previous estimates were also revised lower: May payroll growth was revised from 129,000 to 63,000, while June was revised from 57,000 to 20,000.
Combined, May and June employment growth was 103,000 lower than previously reported.
That creates a more difficult decision for the Fed. Inflation remains above target and several policymakers have already argued for higher rates, but weakening employment growth gives the Fed another reason to remain cautious.
The September meeting has developed into a debate primarily between another hold and a 25-basis-point rate hike.
Before the July jobs report, prediction markets were close to evenly divided. On August 6, both Kalshi and Polymarket were pricing a hold at roughly 53%–55%, with a 25-basis-point hike around 44%–47%.
The weak July employment report then pushed expectations further toward a hold.
Immediately after the jobs data was released on August 7, Fed funds futures were pricing approximately a 40% probability of a September rate hike, down from around 55% immediately before the report.
That is an important reminder of how quickly these probabilities can move.
A stronger-than-expected CPI report could increase expectations for a hike again. Weaker inflation or additional signs of deterioration in the labor market could strengthen the case for leaving rates unchanged.
As of August 7, 2026:
The remaining scheduled FOMC meetings in 2026 are:
The September and December meetings are scheduled to include updated economic projections from Federal Reserve policymakers.
Economic data in this article reflects information available on August 7, 2026. Prediction-market and futures-implied probabilities can change at any time after economic releases, Federal Reserve comments, geopolitical developments, and other market-moving events.
Inflation has eased from some of the elevated readings seen earlier in 2026, but it remains above the Federal Reserve’s 2% target.
The Consumer Price Index fell 0.4% month over month in June, largely because of lower energy prices. Over the previous 12 months, headline CPI increased 3.5%, while core CPI excluding food and energy increased 2.6%.
The Federal Reserve also pays close attention to the Personal Consumption Expenditures price index.
June headline PCE inflation was 3.7% year over year, while core PCE inflation was 3.3%.
Those figures help explain why rate cuts are no longer the central market expectation.
The Fed’s June economic projections showed policymakers expecting 2026 PCE inflation of 3.6% and core PCE inflation of 3.3%. The median projection for the federal funds rate at the end of 2026 was 3.8%.
Those projections are not commitments. They represent policymakers’ individual expectations based on the information available at the time.
The September meeting will include a new set of projections, making it particularly important for anyone following Fed interest rate predictions.
Earlier in 2026, relatively resilient employment data gave the Federal Reserve room to focus heavily on inflation.
That picture has become less clear.
The July employment report showed nonfarm payrolls declining by 23,000, following significantly weaker revised figures for May and June.
The unemployment rate remains relatively low at 4.1%, but the weakening trend in payroll growth gives policymakers another risk to consider.
Raising rates can help control inflation by cooling demand, but tighter monetary policy can also place additional pressure on economic activity and employment.
This is why the September decision is difficult to predict.
A few weeks ago, inflation and support for a rate hike inside the FOMC strengthened the argument for tighter policy. The latest labor-market data has now strengthened the argument for patience.
Fed interest rate prediction markets are markets where participants trade contracts tied to potential Federal Reserve policy outcomes.
Contracts may focus on whether the Fed will:
The price of a contract generally represents the market’s implied probability of the outcome.
For example, a contract trading at $0.70 generally indicates that traders collectively assign the outcome approximately a 70% probability.
Depending on the platform and contract rules, a correct contract may settle at $1 while an incorrect contract settles at $0.
The appeal is straightforward: instead of comparing several economist forecasts, users can see a single market-driven estimate that changes as traders react to new information.
Federal Reserve policy affects much more than short-term borrowing costs.
Interest-rate decisions can influence:
Traditional forecasts remain valuable, but they can become outdated quickly.
A surprise inflation reading, weak jobs report, geopolitical event, or change in Federal Reserve language can reshape expectations within minutes.
Prediction markets can react quickly when sufficient liquidity is available. That makes them useful for seeing how expectations change between FOMC meetings.
The reaction to the July 2026 jobs report is a good example. Expectations for a September rate hike dropped immediately after payroll employment unexpectedly declined.
The Federal Reserve communicates through policy statements, speeches, press conferences, meeting minutes, and quarterly economic projections.
Markets react to all of them.
Higher-than-expected inflation can push probabilities toward a longer period of unchanged rates or an eventual rate hike.
Weaker employment data can make policymakers more cautious about tightening monetary policy.
Even relatively small changes in the Fed’s language can cause traders to reassess the next meeting and the broader path of interest rates.
Prediction markets are particularly useful during periods when there is no overwhelming consensus.
September 2026 is a good example. The Fed has three policymakers who already preferred higher rates in July, but the latest employment figures have weakened the economic case for immediately tightening policy.
That disagreement is reflected directly in market prices.
The CME Group FedWatch Tool remains one of the most widely followed sources for tracking market-implied probabilities around upcoming Federal Reserve decisions.
FedWatch calculates probabilities using pricing in 30-Day Fed Funds futures.
Prediction markets approach the same question differently.
Platforms can list event contracts centered on specific outcomes, such as:
This format can make prediction markets easier for some users to understand.
A contract trading at 60 cents can be read approximately as a 60% implied probability.
Neither prediction markets nor FedWatch should be treated as guaranteed forecasts.
CME FedWatch reflects pricing in the Fed Funds futures market, while prediction-market prices depend on participation, liquidity, order flow, and the rules of individual contracts.
Watching both can provide a broader picture of how interest-rate expectations are developing.
Prediction markets can be informative, but they should not be treated as precise forecasts.
A market price represents a probability, not a certainty.
Its usefulness can depend on:
A heavily traded contract may incorporate new information quickly, but its probability can still change dramatically after an economic release or Federal Reserve statement.
The best way to use Fed prediction markets is as a real-time measure of expectations.
They can complement official economic data, Federal Reserve communications, economist forecasts, Treasury markets, and futures-based tools such as CME FedWatch.
Fed rate markets can appeal to several types of market participants.
Retail traders may use them to express a view on monetary policy.
Investors and analysts can monitor them as another indicator of changing market sentiment.
Economic and financial journalists can use them to illustrate how expectations are changing before major FOMC decisions.
Others may simply follow the probabilities alongside:
Together, those indicators provide a broader picture of what markets expect the Federal Reserve to do next.
Prediction markets have important limitations.
Liquidity can vary considerably between contracts. Longer-term or more specific markets may attract less trading activity than contracts focused on the next Federal Reserve meeting.
In less liquid markets, relatively small trades can have a larger effect on the displayed probability.
Contract wording also matters.
Before trading, users should understand exactly what outcome determines settlement, which official source is used, and how unusual policy decisions would be classified.
Access can also differ by platform and location because eligibility and regulatory requirements vary.
Most importantly, a probability is not a guarantee.
A market showing a 70% probability does not mean the outcome will happen. It means the current market price implies that traders collectively view it as substantially more likely than the alternative outcomes.
Fed markets can move especially quickly around:
A market that appears stable one day can change significantly after a single data release.
Several major economic releases remain before the September 15–16 FOMC meeting.
The most important factors are likely to be inflation and employment.
If CPI or PCE inflation comes in stronger than expected, the argument for a 25-basis-point hike could strengthen.
The three dissenting votes at the July meeting show that support for higher rates already exists within the FOMC.
Continued disinflation would make an immediate rate hike harder to justify, particularly if the labor market continues to weaken.
The July payroll decline has increased attention on the employment side of the Fed’s mandate.
Another weak employment report before the September meeting could significantly strengthen expectations for a hold.
Comments from Federal Reserve officials can also move probabilities.
If policymakers increasingly signal concern about inflation, markets could shift toward a hike. If officials focus more heavily on weakening employment or economic activity, expectations may move toward another hold.
That is why current prediction-market pricing should be treated as a snapshot rather than a final forecast.
Prediction markets are not replacing traditional monetary-policy analysis.
However, they can provide an easy-to-read view of where traders believe policy is heading.
That is particularly useful during periods of genuine uncertainty.
The Federal Reserve entered August with inflation still above target and three FOMC members already supporting a rate hike. The July employment report then added a significant argument for caution.
Those competing pressures make the September 2026 meeting one of the more interesting Federal Reserve decisions of the year.
Prediction markets allow users to watch that debate play out through prices rather than waiting for a new analyst forecast every time the economic outlook changes.
The Federal Reserve held rates at 3.50%–3.75% in July, but the decision revealed significant disagreement inside the FOMC.
Three policymakers wanted to raise rates immediately.
At the same time, the latest U.S. employment report showed payrolls declining and previous months being revised significantly lower.
That leaves the Fed balancing two risks:
Inflation remains too high, but the labor market may be losing momentum.
For now, the September decision appears primarily to be a choice between another hold and a 25-basis-point increase.
Prediction markets, Fed Funds futures, inflation data, employment reports, and Federal Reserve communications will continue to move those probabilities before the September 15–16 meeting.
Anyone following Fed interest rate predictions should therefore focus less on a single forecast and more on how the market changes as new information arrives.
They are markets where participants trade contracts based on potential Federal Reserve interest-rate decisions, such as a rate increase, rate cut, or no change. Contract prices generally represent the market’s implied probability of each outcome.
A September rate hike remains possible, but the outlook shifted following the weak July jobs report. Immediately after the August 7 employment data, Fed Funds futures priced roughly a 40% probability of a September hike, down from about 55% before the report. Market probabilities can change significantly before the September 15–16 meeting.
The Federal Reserve’s target range for the federal funds rate is 3.50%–3.75% following the July 28–29, 2026 FOMC meeting.
The next scheduled FOMC meeting is September 15–16, 2026. The remaining meetings after September are October 27–28 and December 8–9.
They can be informative when liquidity is strong, but they show probabilities rather than certainties. Prices can change quickly after inflation data, jobs reports, Federal Reserve communications, or other market-moving events.
The CME Group FedWatch Tool uses 30-Day Fed Funds futures to calculate implied probabilities around Federal Reserve decisions. Prediction markets use event-style contracts tied directly to specific outcomes. The two can sometimes produce different probabilities, so comparing them can provide a broader view of market expectations.
Yes. Some prediction-market platforms offer contracts tied to Federal Reserve decisions and other economic outcomes. Availability depends on the platform, the specific contract, and eligibility requirements where the user lives. See our guide to the Best Prediction Markets in 2026 for more information.