Anticipation Builds: Fed Rate Cut Looms as Prediction Markets Point to Imminent Policy Shift
Prediction Platforms Indicate Strong Likelihood of Rate Reduction
Forecasting platforms dealing in cryptocurrency-based predictions are now strongly suggesting that the United States central bank is poised to decrease interest rates in the coming month. On Polymarket, a prominent decentralized prediction platform, the chances of a 25 basis point rate reduction have soared to an impressive 81%. This marks a significant increase from 67% just the previous day and 44% a week prior. Conversely, the likelihood of a more substantial 50 basis point cut remains quite low at only 2%. Meanwhile, the probability of interest rates staying at their current range of 3.75%-4.00% has sharply fallen to 18% within a 24-hour period. Over $159 million has been placed on these outcomes, with the Federal Open Market Committee's next and final meeting of the year scheduled for December 10.
Parallel Predictions from Regulated Platforms Mirror Market Sentiment
Similarly, participants on Kalshi, a regulated prediction platform, are pricing in an 81% chance for a 25 basis point decrease in the federal funds rate. These market expectations closely mirror the CME FedWatch Tool's estimations, which also project an 84% probability of the central bank announcing a 25 basis point reduction. This convergence of predictions from various platforms underscores a growing consensus regarding the Federal Reserve's likely next move.
Optimistic Market Reactions Follow Central Bank's Softer Stance
The heightened probability of a rate cut comes in the wake of more accommodating comments from Federal Reserve officials, including Governor Christopher Waller and New York Fed President John Williams. This renewed sense of optimism has provided a boost to both stock and cryptocurrency markets, leading to gains in assets such as Bitcoin. Jan Hatzius, chief economist at Goldman Sachs, has suggested that the delayed September jobs report may have solidified the expectation of a 25 basis point cut during the December 9–10 FOMC meeting. Furthermore, renowned investor Bill Gross has also publicly anticipated a rate cut in the upcoming month, reinforcing the prevailing market sentiment.