What will Fed Rate hit before 2027?

Resolution Criteria

The FED interest rates are defined in this market by the lower or the upper bound of the target federal funds range. The decisions on the target federal fund range are made by the Federal Open Market Committee (FOMC) meetings. This market will resolve to “Yes” if the lower or the upper bound of the target federal funds rate reaches the specified level at any point by December 31, 2026, 12:59 PM ET. Otherwise, this market will resolve to “No.” Emergency rate cuts and hikes outside the regularly scheduled meetings will be considered. The resolution source for this market is the official website of the Federal Reserve at: https://www.federalreserve.gov/monetarypolicy/openmarket.htm. This market may resolve as soon as the relevant data showing the reached level is published.

Market volume on this Fed rate prediction market is heavily concentrated on the lower end of the target range, with the 3.25% and 3.0% downside outcomes attracting the most backing among all 21 possible levels. The market covers whether the lower or upper bound of the federal funds target range will touch any specified level by 31 December 2026, with resolution sourced from the Federal Reserve's official open market operations page.

Market structure

Twenty-one outcomes span a wide range of possible federal funds rate levels, from near-zero to above 5.5%, covering both upside and downside scenarios. Volume is heavily concentrated on two downside outcomes, with a long tail of broadly distributed interest across the remaining levels. Resolution requires the lower or upper bound of the target range to reach the specified level at any point before the deadline. Emergency rate actions outside scheduled FOMC meetings are also eligible for resolution.

Background

The Federal Reserve has been navigating a complex monetary policy environment following its aggressive rate-hiking cycle begun in 2022, which pushed the federal funds rate to a target range of 5.25%–5.50% — the highest level in over two decades. The Fed began cutting rates in late 2024 as inflation showed signs of easing toward its 2% target. However, persistent inflation risks, labour market resilience, and global economic uncertainty have complicated the pace and depth of further cuts. The FOMC meets approximately eight times per year, and each decision carries significant implications for borrowing costs, financial markets, and economic growth. This market captures the full spectrum of plausible rate outcomes, including scenarios in which policy reverses course and rates rise again.

Key factors

The primary driver of resolution is the cumulative series of FOMC decisions between now and the end of 2026. Each meeting produces a statement updating the target federal funds range, and the lower or upper bound of that range is the operative measure for this market. Key variables include the trajectory of US inflation — particularly core PCE, the Fed's preferred gauge — as well as employment data, GDP growth, and any significant financial stability events. Geopolitical shocks, trade policy changes, or a sharp deterioration in credit conditions could prompt emergency action outside scheduled meetings, which also count for resolution. The market encompasses both cutting and hiking scenarios, reflecting genuine uncertainty about whether the Fed will continue easing, pause, or potentially reverse course. The broad distribution across upside outcomes — those above current levels — captures tail risk from a renewed inflation surge or unexpected policy pivot.

FAQ