What will the Fed rate be at the end of 2026?

Resolution Criteria

The FED rate is defined in this market by 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 according to the upper bound of the Federal Reserve’s target federal funds range after the December 2026 Federal Open Market Committee (FOMC) meeting, currently scheduled for December 8-9, 2026. This market may resolve immediately after the statement for the FOMC’s December meeting, with relevant information about the FOMC’s decision on the target federal funds range, has been issued. If no FOMC decision on the target federal funds range for their December meeting has been issued by December 31, 2026, 11:59 PM ET, this market will resolve according to the upper bound of the target federal funds range at that time. The upper bound of the target federal funds range will be rounded to the nearest 25 basis points for resolution of this market. If the upper bound of the target federal funds range falls exactly between two listed options, it will be rounded away from zero (e.g. if the upper bound is 2.875, with listed options of 3.0 & 2.75, this market will resolve to 3.0). The primary resolution source for this market will be official information from the Federal Reserve (https://www.federalreserve.gov/monetarypolicy/openmarket.htm).

Prediction market trading on the Federal Reserve's end-2026 rate is heavily concentrated on two outcomes: 3.75% and 4.0% together account for the vast majority of volume, making this effectively a two-horse race between those adjacent levels. The market resolves according to the upper bound of the Fed's target federal funds range following the December 2026 FOMC meeting, scheduled for 8–9 December 2026, using official Federal Reserve communications as the primary source.

Market structure

The market offers 15 discrete outcomes spanning from 1.0% or below to 4.5% or above, each representing a possible upper bound of the Fed's target range rounded to the nearest 25 basis points. Volume is heavily concentrated on 3.75% and 4.0%, with a secondary cluster around 3.25% and 4.25%. All remaining outcomes carry minimal weight. Resolution follows the December 2026 FOMC statement, with a fallback to the prevailing rate if no decision has been issued by 31 December 2026, 11:59 PM ET.

Background

The Federal Reserve has maintained an elevated federal funds rate following its aggressive tightening cycle that began in 2022, when rates were raised from near-zero to a peak target range of 5.25%–5.50% in response to post-pandemic inflation. Since late 2024 the FOMC has cautiously begun easing, trimming the upper bound incrementally as inflation moved closer to the 2% target. The pace and endpoint of this easing cycle remain the central question for markets, businesses, and policymakers alike. Where rates land at year-end 2026 carries significant implications for mortgage costs, corporate borrowing, the US dollar, and risk asset valuations globally. The FOMC meets eight times per year, and each meeting is a potential inflection point that can shift the cumulative rate trajectory substantially.

Key factors

Several structural forces could influence where the Fed funds rate upper bound sits after the December 2026 FOMC meeting. Inflation dynamics are the most direct input: sustained progress toward the 2% target historically supports continued easing, while re-acceleration — whether driven by domestic demand, supply shocks, or import-price pressures including tariff effects — could prompt a pause or reversal. Labour market conditions feed directly into the Fed's dual mandate; unexpected weakness might accelerate cuts, while persistent tightness could sustain higher rates for longer. Fiscal policy, particularly the trajectory of US government borrowing and any associated upward pressure on long-term yields, may constrain or complicate the Fed's room to manoeuvre. Global central bank policy divergence — especially moves by the European Central Bank or Bank of England — can affect dollar strength and imported inflation. Finally, the composition and stated preferences of the FOMC itself matter: shifts in board membership or changes in the Fed Chair role could alter the committee's reaction function, affecting how aggressively it responds to incoming data between now and December 2026.

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