Polymarket

Polymarket Predicts Near-Certainty Against December Fed Rate Cut Amid Persistent Inflation and Strong Economy

A Polymarket prediction market indicates an overwhelming 99.55% probability that the Federal Reserve will not decrease interest rates by 25 basis points after its December 2026 meeting, reflecting broad market expectations for continued monetary tightening or a steady stance.

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— 4 min read

The Polymarket prediction market, which poses the question, 'Will the Fed decrease interest rates by 25 bps after the December 2026 meeting?', is currently signaling a near-unanimous 'No' with a probability of 99.55%. This robust sentiment, backed by a trading volume exceeding $3.4 million, underscores a widespread conviction among participants that the Federal Reserve is highly unlikely to cut rates at its upcoming Federal Open Market Committee (FOMC) meeting scheduled for December 8-9, 2026.

This market's resolution hinges on the upper bound of the target federal funds range. A 'Yes' outcome would require a 25 basis point (bps) reduction from the current level. However, recent economic data and expert analyses point firmly towards either a further interest rate hike or, at minimum, a decision to hold rates steady, rather than a cut.

Key Factors Driving Market Expectations

The prevailing market outlook is largely shaped by persistent inflationary pressures and a resilient U.S. economy. The Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, has remained stubbornly elevated, hovering near 3% through 2026, well above the central bank's 2% target. Similarly, the Consumer Price Index (CPI) for September 2026 rose by 3.7% year-over-year, with the core rate (excluding food and energy) at 2.6%. While October CPI is projected to show a slight slowdown, with headline inflation at 0.3% month-over-month and core inflation at 0.2%, these figures still suggest persistent price increases.

Adding to the hawkish sentiment is a robust U.S. labor market. In October, nonfarm payroll employment increased by 165,000, and the unemployment rate nudged down to 4.14%. This strong employment picture provides the Federal Reserve with ample room to prioritize inflation containment without immediate concerns about economic contraction.

Economic growth also remains firm, with U.S. GDP growth tracking near 3% in the third quarter of 2026. Strong consumer spending and business investment, particularly in artificial intelligence, have contributed to this robust activity.

Expert Consensus and Fed Officials' Stance

Leading financial institutions and Federal Reserve officials have largely solidified expectations for continued tightening. Goldman Sachs pushed its Fed rate cut forecast back to December 2026, citing sticky inflation and a resilient jobs market, with its terminal rate view held at 3% to 3.25%. However, more recent analyses from Commerzbank and UBS anticipate a 25 bps rate hike in December.

Federal Reserve Governor Christopher Waller, in a speech on November 10, 2026, explicitly stated his plan to support at least a 25 bps increase in the policy rate at the December FOMC meeting, and even suggested a 50 bps hike if October CPI data show a significant uptick. New York Fed President John Williams has also reiterated that inflation is "absolutely too high" and that monetary policy has a critical role in preventing price shocks from becoming more persistent.

Market pricing, as reflected by OIS pricing and CME FedWatch, implies an 82-85% chance of a 25 bps hike at the December meeting. Kalshi, another prediction market, similarly indicates an 81% probability of a 25 bps hike. This aligns with the September FOMC projections, where most members forecasted at least one more rate increase in 2026.

Polymarket Odds Reflect Broader Market Sentiment

The current Polymarket odds of 0.0045 for a 25 bps rate decrease translate to a mere 0.45% probability, effectively pricing out any chance of such a move. Conversely, the 0.9955 price for 'No' implies a 99.55% probability. This mirrors the broader financial market consensus that the Fed's focus remains squarely on taming inflation through restrictive monetary policy, with rate cuts firmly off the table for the foreseeable future, and a hike being the most likely scenario.

Sources:

Market data fetched at 2026-11-10 10:25 UTC | Polymarket ID: 3215006

This article is generated by AI for informational purposes only. It does not constitute financial advice. Always do your own research before making any investment decisions. Data sourced from Polymarket and public web sources.

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