Fed rate cut by...?
Short Answer
Both the model and the market expect a Fed rate cut by the December Meeting, with only minor residual uncertainty.
1. Executive Verdict
- No Fed rate cut by December 2026 appears likely given persistent inflation and the FOMC's hawkish stance.
- September and October 2026 rate cuts hold very low probability per derivatives markets.
- The Federal Reserve unanimously voted to maintain current rates through June 2026.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| Outcome | — | — | Insufficient data |
Current Context
Federal Reserve holds rates, but dissent highlights hawkish shifts. As of August 6, 2026, the Federal Reserve maintains the federal funds rate target range at 3.5% to 3.75% [^][^][^][^][^]. This follows a 9-3 vote to hold rates steady at the July 29, 2026, FOMC meeting [^][^][^]. Kevin Warsh chairs the FOMC, having succeeded Jerome Powell earlier in 2026 [^][^][^]. The July meeting included a notable dissent from three regional bank presidents, Beth Hammack, Neel Kashkari, and Lorie Logan, who advocated for a 25-basis-point rate increase [^][^][^]. This signals a hawkish shift within the committee, driven by persistent inflation concerns [^][^].
Markets anticipate Fed rate hold or further hike. Prediction markets like Kalshi and Polymarket show very low probability for a rate cut at the upcoming September 15-16, 2026, FOMC meeting [^][^][^]. Instead, these markets indicate high odds for maintaining current rates or implementing a 25-basis-point hike [^][^][^]. The CME FedWatch tool, as of early August 2026, reflects market expectations for one additional rate hike for the remainder of 2026 [^]. New York Fed President John Williams stated in early August 2026 that monetary policy is well-positioned for disinflation, but the FOMC stands ready to act if the economy deviates from the 2% inflation goal [^].
2. Market Behavior & Price Dynamics
Historical Price (Probability)
Outcome probability
Date
This market's price has been range-bound and sideways, trading between 10.5% and 16.0% since inception. The current probability of 11.5% is down from its starting point of 13.5%. The most significant movement was a drop from 13.5% to 11.5% between July 23 and July 30. This repricing aligns with the Federal Reserve's July 29 announcement that it would maintain the federal funds rate target range at 3.5% to 3.75%, signaling a continued hawkish stance and reducing the market-implied odds of a near-term cut.
The most critical technical factor is the complete absence of trading volume. With zero contracts traded, the price action does not reflect any market participation or conviction. The price movements are likely attributable to automated market maker adjustments rather than executed orders. Consequently, the observed price range of 10.5% to 16.0% does not represent true support or resistance levels established by buying and selling pressure. While the price implies low market sentiment for a rate cut by the January 2026 meeting, this reading is entirely theoretical due to the market's illiquidity.
3. Market Data
Contract Snapshot
This market resolves to "Yes" if the upper bound of the target federal funds rate is decreased between December 16, 2025, and the completion of the September 2026 Federal Open Market Committee (FOMC) meeting (scheduled for September 15-16), with emergency cuts qualifying. Otherwise, it resolves to "No". A "No" resolution also occurs if no September meeting takes place and no qualifying rate cut is announced by October 7, 2026, 11:59 PM ET. The primary resolution source is the Federal Reserve's official website.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Last trade probability |
|---|
Market Discussion
Participants in this prediction market largely anticipate no Federal Reserve rate cuts in the near-to-medium term. The strong consensus against cuts is driven by persistent inflation above the 2% target and a resilient economy with solid job gains, leading traders to expect continued policy restraint. Current odds for a rate cut remain low, at 2% by September 2026, increasing to just 12% by December 2026, despite upcoming economic releases and Fed meetings being noted as potential influencing factors.
4. What specific shifts in key economic indicators, like the Consumer Price Index or unemployment rate, would be necessary for the FOMC to pivot to a rate cut in the second half of 2026?
| Revised 2026 PCE Inflation Forecast | 3.6% (from 2.7%) [^] |
|---|---|
| Revised 2026 Core PCE Forecast | 3.3% (from 2.7%) [^] |
| Inflation Above Target | Over 60 months [^] |
A FOMC rate cut requires specific disinflation and labor market shifts. For the Federal Open Market Committee to pivot to a rate cut in the second half of 2026, it would necessitate sustained, credible evidence of cyclical disinflation in either Personal Consumption Expenditures (PCE) or Consumer Price Index (CPI) metrics, alongside a visible cooling in labor market indicators, such as slower job gains, rising jobless claims, and increased unemployment [^][^]. The Committee would also need clear evidence that the disinflation process is firmly back on track toward its 2% target [^]. Beyond inflation, a significant deterioration in labor market conditions and a loss of consumption momentum would be required to outweigh current inflation risks [^][^][^][^].
Current inflationary pressures and strong economy hinder prospects for cuts. This pivot is particularly challenging given that inflation has exceeded the target for over 60 months [^]. As of June 2026, current inflationary pressures, exacerbated by energy supply disruptions, led to significant upward revisions in 2026 PCE inflation forecasts to 3.6% (from 2.7%) and core PCE to 3.3% (from 2.7%) [^]. Consequently, as of August 6, 2026, the FOMC is under pressure to consider rate hikes due to persistently above-target inflation and strong economic indicators, including a robust manufacturing sector and stable labor market conditions [^][^][^].
5. What recent statements from Fed Chair Kevin Warsh and New York Fed President John Williams support the market consensus against a 2026 rate cut?
| Warsh Chairmanship Start Date | May 22, 2026 [^][^][^] |
|---|---|
| End-2026 Federal Funds Rate Projection | 3.8% (up from 3.4%) [^][^] |
| Fed Inflation Target | 2% [^][^] |
Fed officials support current rates, opposing 2026 rate cuts. Both Fed Chair Kevin Warsh and New York Fed President John Williams have indicated support for maintaining current interest rates, aligning with the market consensus against a 2026 rate cut. They emphasize that the current federal funds rate is suitably positioned to fulfill the Fed's dual mandate of maximum employment and price stability [^][^][^]. This stance collectively signals a commitment to prevailing policy conditions rather than future easing.
Chairman Warsh established a hawkish stance, pricing out cuts. Upon assuming the chairmanship on May 22, 2026, Kevin Warsh quickly established a hawkish stance, committing the Fed to price stability and advocating for a restrictive policy to combat persistent inflation pressures [^][^][^]. During his initial FOMC meeting in mid-June 2026, Warsh underscored that inflation is a policy choice and reiterated the Fed's commitment to achieving its 2% inflation target [^][^][^][^][^]. This led to market adjustments, with anticipated rate cuts for the remainder of 2026 being priced out. The median projection for the federal funds rate at the end of 2026 was consequently raised to 3.8% from 3.4% in March, signaling a potential shift towards rate hikes rather than cuts [^][^][^][^][^].
Williams perceives no need to adjust current interest rates. New York Fed President John Williams has explicitly communicated that he perceives no necessity to either raise or lower interest rates at present, indicating no definite future direction for policy [^][^]. He highlighted that inflation continues to exceed the 2% target, which provides a justification for pausing any easing measures [^][^]. In an interview published on August 3, 2026, Williams reaffirmed the FOMC's unwavering focus on achieving the 2% inflation objective and restoring overall price stability [^].
6. How do the stated policy thresholds of hawkish dissenters like Beth Hammack and Neel Kashkari compare to the positions of more centrist FOMC members?
| Hawkish Dissenters | Beth Hammack, Neel Kashkari, and Lorie Logan [^][^][^] |
|---|---|
| Hawkish Proposal | 1/4 percentage point rate hike [^][^][^] |
| Centrist Stance | Hold rates steady (supported by nine members) [^][^] |
Hawkish FOMC members advocate for an immediate rate hike due to inflation concerns. Beth Hammack, Neel Kashkari, and Lorie Logan are among those dissenting from the FOMC's decision to maintain the federal funds rate, instead calling for a 0.25 percentage point increase [^][^][^]. This stance is driven by worries about persistent, supply-shock-driven inflation and the potential for inflation expectations to become unanchored [^][^][^]. These participants caution against loosening policy too soon, warning it could lead to further inflationary pressures [^][^].
The majority of the FOMC prefers a data-dependent, wait-and-see approach. Conversely, a larger faction of nine FOMC members supports holding rates steady, adopting a wait-and-see strategy [^][^]. Centrist members and the committee leadership characterize the current policy, which has kept the federal funds target rate range at 3.50% to 3.75% as of August 2026, as either mildly restrictive or near neutral [^][^][^]. This group prioritizes relying on incoming economic data, aiming to balance inflation goals with potential risks to the labor market, and awaits clearer macroeconomic signals before implementing further rate adjustments [^][^][^][^][^].
7. What are the release dates for the key economic reports, specifically CPI and Non-Farm Payrolls, that will inform the FOMC's final three meetings of 2026?
| Final 2026 FOMC Meeting Dates | September 15–16, October 27–28, and December 8–9 [^][^][^][^] |
|---|---|
| Earliest Relevant Economic Report Release | Employment Situation (September 4, 2026) [^][^] |
| Latest Relevant Economic Report Release | November CPI (December 10, 2026) [^][^] |
The Federal Open Market Committee has scheduled its final three meetings of 2026. These critical meetings for setting monetary policy are scheduled for September 15–16, October 27–28, and December 8–9 [^][^][^][^]. The decisions made during these sessions are significantly influenced by a range of key economic indicators.
Key economic reports inform the initial 2026 fall meetings. Specifically, the Consumer Price Index (CPI) and Non-Farm Payrolls (Employment Situation) reports provide crucial data influencing policy discussions. For the September and October FOMC meetings, relevant data includes the Employment Situation report released on September 4, 2026, and the September CPI report released on October 14, 2026. Further reports influencing these discussions are the Employment Situation report on October 2, 2026, and the October CPI report on November 10, 2026 [^][^].
8. What probabilities do derivatives markets, such as the CME FedWatch Tool, assign to rate hikes versus cuts for the remaining 2026 FOMC meetings?
| Sept 2026 Meeting (3.75-4.00% range) | 57.4% probability [^][^] |
|---|---|
| Sept 2026 Meeting (3.50-3.75% range) | 42.6% probability [^][^] |
| Dec 2026 Meeting Rate Hike | Approximately 55% [^] |
Derivatives markets currently favor rate hikes for remaining 2026 FOMC meetings. Analysis of these markets, including those tracked by the CME FedWatch Tool, indicates a higher probability for rate hikes than cuts for the Federal Open Market Committee (FOMC) meetings through the rest of 2026, reflecting significant market uncertainty as of early August 2026 [^][^][^][^]. These market-implied probabilities for various FOMC interest rate actions are calculated using pricing from 30-Day Fed Funds futures contracts [^][^][^][^].
Specific meeting probabilities underscore expectations for potential rate increases. For the September 15–16, 2026 meeting, derivatives market indicators show a 57.4% probability for the 3.75–4.00% target range, compared to 42.6% for 3.50–3.75%, suggesting a notable probability for further rate hikes [^][^]. Looking ahead to the December 8–9, 2026 FOMC meeting, specific prediction markets indicate that a rate hike is considered the base case, with probabilities approximately split as 55% for a hike, 25% for a hold, and 20% for a cut [^].
Market pricing generally suggests restrictive or rising rates for 2026. Broad market pricing as of early August 2026 broadly indicates that the cumulative expectation is for rates to remain restrictive or potentially rise for the year, a contrast to earlier scenarios that had anticipated rapid rate cuts [^][^]. Market participants continuously monitor these probabilities, which are derived from ongoing trading activity in Fed Funds futures, to gauge expectations for the target federal funds rate [^][^].
9. What Could Change the Odds
Key Catalysts
At the June 16-17, 2026, FOMC meeting, the Federal Reserve unanimously voted to maintain the federal funds rate target range at 3.5% to 3.75%, leaving it unchanged from the previous level [^] [^] [^] . This meeting, chaired by Kevin Warsh, saw the policy statement remove prior language signaling a bias toward future rate cuts [^][^]. The statement instead leaned toward potential future rate hikes, driven by persistent inflation concerns [^][^].
Following the June 2026 decision, quarterly projections from the FOMC indicated a median target rate of 3.8% by the end of 2026 [^] [^] [^] . This implied that some participants anticipated at least one rate hike rather than a cut [^][^]. Federal Reserve officials, including New York Fed President John Williams, have stated that monetary policy is currently positioned to support a disinflationary path toward the 2% goal, though they remain prepared to act if the economy deviates from this trajectory [^][^][^]. The FOMC maintained a federal funds target range of 3-1/2 to 3-3/4 percent as of late June and mid-July 2026 [^][^].
As of August 2026, market sentiment and institutional forecasts remain divided regarding future rate moves [^] [^] [^] . | J.P. Morgan Global Research" data-source-lanes="traditional">[^][^]. While some traders and analysts have begun pricing in or calling for a potential September 2026 rate cut, citing perceived economic slowing and job market weakness, other major institutions and prediction markets signaled continued expectations for holds or even potential hikes [^][^][^]. The effective federal funds rate (EFFR) stands at 3.63% as of August 6, 2026, based on data from August 4, 2026 [^][^][^][^].
Key Dates & Catalysts
- Closes: June 17, 2026
10. Decision-Flipping Events
- Trigger: At the June 16-17, 2026, FOMC meeting, the Federal Reserve unanimously voted to maintain the federal funds rate target range at 3.5% to 3.75%, leaving it unchanged from the previous level [^] [^] [^] .
- Trigger: This meeting, chaired by Kevin Warsh, saw the policy statement remove prior language signaling a bias toward future rate cuts [^] [^] .
- Trigger: The statement instead leaned toward potential future rate hikes, driven by persistent inflation concerns [^] [^] .
- Trigger: Following the June 2026 decision, quarterly projections from the FOMC indicated a median target rate of 3.8% by the end of 2026 [^] [^] [^] .
12. Historical Resolutions
No historical resolution data available for this series.
