Updated September 16, 2026
The three major market indicators now agree on the most likely outcome: a 25-basis-point rate increase.
The Federal Reserve will announce its September interest-rate decision at 2:00 p.m. ET on September 16, with markets now strongly expecting a 25-basis-point rate hike.
Polymarket currently gives a 25-basis-point increase an implied probability of around 88%, compared with approximately 13% for no change. Kalshi is showing similar pricing, with a quarter-point hike at around 88%.
That is a major shift from early September, when prediction markets were close to evenly divided between a hike and another hold. The change comes after firm inflation data and a stronger August jobs report strengthened the argument for tighter monetary policy.
The federal funds target range currently stands at 3.50%–3.75%. A 25-basis-point increase would move it to 3.75%–4.00%. The Federal Reserve held rates unchanged in July, although Beth Hammack, Neel Kashkari and Lorie Logan dissented in favor of a quarter-point increase.
The difference is relatively small compared with earlier in the month. Polymarket, Kalshi and Fed funds futures are now all pointing clearly toward a hike. Prediction-market prices can change quickly. The probabilities above were checked on September 16, 2026, before the Federal Reserve's decision.
Fed Rate Outlook | Current Data |
|---|---|
Current Rate | 3.50%–3.75% |
Fed Decision | September 16, 2:00 p.m. ET |
Market Favorite | 25-basis-point rate hike |
Polymarket | ~88% hike |
Kalshi | ~88% hike |
CME FedWatch | ~93% hike |
August CPI | +0.4% MoM / +3.4% YoY |
Core CPI | +0.3% MoM / +2.4% YoY |
August Jobs | +162,000 |
Unemployment | 4.1% |
What to watch: Markets strongly expect the Fed to raise rates by 25 basis points, which would move the target range to 3.75%–4.00%. The September meeting will also include updated economic projections from Federal Reserve policymakers.
After September, the Federal Open Market Committee has two scheduled meetings remaining in 2026:
The December meeting will also include an updated Summary of Economic Projections. Those meetings are already attracting attention from prediction markets, particularly as traders consider whether a September increase could be followed by another hike before the end of the year.
Inflation remains one of the biggest reasons markets expect the Federal Reserve to raise rates in September. The August Consumer Price Index increased 0.4% from the previous month and 3.4% over the previous 12 months.
Core CPI, which excludes food and energy, increased 0.3% during August and 2.4% year over year. The headline reading was partly driven by energy. Gasoline prices increased 3.9% during August, while the broader energy index increased 2.1%.
Prediction markets responded quickly to the report. Kalshi's probability of a 25-basis-point September hike jumped to around 81% shortly after the CPI release, up roughly 20 percentage points from the previous day. It has since moved higher again.
That move illustrates how quickly Fed prediction markets can react when an important economic release changes expectations. The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures price index, also remains elevated.
July PCE inflation stood at 3.7% year over year, while core PCE was 3.3%. August PCE will not be released until September 30, meaning policymakers will make the September decision without another update to that measure.
The labor market has also given the Federal Reserve more room to focus on inflation. U.S. nonfarm payroll employment increased by 162,000 in August, while the unemployment rate remained unchanged at 4.1%.
That followed a much weaker July employment report, which had temporarily pushed expectations toward another Fed hold.
The stronger August numbers changed that calculation. Higher interest rates can reduce demand and help contain inflation, but they can also weaken employment and economic activity. A resilient labor market gives policymakers more flexibility to maintain or increase restrictive monetary policy while focusing on price stability.
The combination of August employment data and the latest inflation readings has helped turn what was close to a 50/50 September decision into one where markets now strongly favor a rate hike.
Federal Reserve prediction markets can move after almost any information that changes expectations for monetary policy.
Important catalysts include:
September 2026 provides a clear example. The Federal Reserve left rates unchanged in July, but three FOMC members voted for an immediate 25-basis-point increase.
A weak July employment report subsequently reduced expectations for a September hike. Stronger August employment data then moved markets back toward an increase, before the August inflation report triggered another significant repricing. By September 16, both Polymarket and Kalshi were pricing a quarter-point hike at close to 90%.
Rather than waiting for a new analyst forecast after every economic release, prediction markets allow traders to see how expectations are changing as new information arrives.
The CME FedWatch Tool remains one of the most widely followed measures of expectations around Federal Reserve decisions. FedWatch calculates implied probabilities using prices in 30-Day Fed Funds futures.
Prediction markets such as Kalshi and Polymarket approach the same question differently. Traders buy and sell event contracts tied directly to outcomes such as:
The two approaches do not always produce identical probabilities. Ahead of the September 2026 decision, however, they are telling broadly the same story. Polymarket and Kalshi are pricing a quarter-point hike at around 88%, while Fed funds futures put the probability at approximately 93%.
Neither should be treated as a guaranteed forecast. FedWatch reflects pricing in Fed Funds futures, while prediction-market probabilities depend on their own participants, liquidity, order books and contract structures.
Looking at both can provide a broader view of how markets are interpreting the same economic data and Federal Reserve signals.
Markets now strongly expect the Federal Reserve to raise interest rates by 25 basis points at its September meeting.
As of September 16, Polymarket and Kalshi put the implied probability at close to 90%, while CME FedWatch is around 93%.
That would move the federal funds target range from 3.50%–3.75% to 3.75%–4.00%. The outcome is not official until the Federal Reserve releases its policy statement at 2:00 p.m. ET.
Prediction markets strongly favor a 25-basis-point rate increase. Polymarket and Kalshi currently put the implied probability at around 88%, with no change priced at roughly 12%–13%.
Fed interest rate prediction markets allow participants to trade contracts based on potential Federal Reserve decisions, such as a rate increase, rate cut or no change.
Contract prices generally reflect the market's implied probability of each outcome. For example, a contract trading at 88 cents can broadly be interpreted as the market assigning that outcome an implied probability of approximately 88%.
Markets strongly expect a rate hike, but the decision has not yet been announced. Prediction markets currently give a 25-basis-point increase close to a 90% implied probability.
The Federal Reserve is scheduled to announce its decision at 2:00 p.m. ET on September 16.
The Federal Reserve's target range for the federal funds rate is currently 3.50%–3.75%, following the July 28–29, 2026 FOMC meeting.
A 25-basis-point increase would move the range to 3.75%–4.00%.
The current FOMC meeting takes place September 15–16, 2026.
After September, the remaining scheduled meetings are October 27–28 and December 8–9.
Expectations moved sharply toward a rate hike following stronger August employment data and the August CPI report.
Payroll employment increased by 162,000 while unemployment remained at 4.1%. Headline CPI then increased 0.4% during August and remained 3.4% higher than a year earlier.
Those reports strengthened the argument that the Federal Reserve still has work to do on inflation.
Prediction markets can provide a useful measure of expectations when trading activity and liquidity are 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.
CME FedWatch uses Fed Funds futures to calculate implied probabilities around Federal Reserve decisions.
Prediction markets use event contracts tied directly to specific outcomes.
The two can sometimes show different probabilities because they involve different market structures and participants. Comparing them can provide a broader picture of how traders are pricing the next Federal Reserve decision.
Yes. Prediction-market platforms including Kalshi and Polymarket offer markets tied to Federal Reserve decisions and other economic outcomes.
Availability depends on the platform, specific market and user eligibility.
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