Traders On Prediction Markets Backed The December Fed Rate Cut
The Federal Reserve has cut interest rates for the third meeting in a row, and prediction market traders were ahead of the move once again. On Wednesday, the Fed lowered its benchmark rate by 25 basis points to a 3.50%–3.75% range, a decision backed overwhelmingly by markets even as key officials dissented. Fed Governor Stephen Miran, Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee all opposed the move.
On Kalshi and Polymarket, traders had already priced in the cut with near certainty. Earlier this week, odds of a 25 bps reduction sat at 94%, climbing to 97% by the time the decision was announced. Polymarket recorded roughly $54 million in volume on contracts tied to the cut, while Kalshi saw about $11.2 million in trading on the same outcome.
That conviction came despite an unusual data blackout. The Bureau of Labor Statistics canceled its October 2025 jobs report and delayed the November report to December 16, just days before new inflation data. Fed Chair Jerome Powell blamed the disruptions on the U.S. government shutdown, but insisted that available public and private indicators showed little change in the broader outlook.
Other signals pointed to a slowing economy. ADP data showed the U.S. shedding 120,000 jobs in early December, and consumer spending, the Fed’s preferred gauge of inflation pressure, rose just 0.2% excluding food and energy. Overall inflation remains at 3.0%, still above the Fed’s 2.0% goal.
Initially, prediction markets leaned toward no change, especially after Federal Open Market Committee minutes revealed “strong differing views” on a third cut. That shifted when New York Fed President John Williams hinted at “a further adjustment in the near term,” pushing odds of a cut from 40% to 70%.
With several Fed governors also publicly backing easier policy, traders locked in their view that this cut was coming. Now, attention turns to January, where early odds on Kalshi and Polymarket show about an 85% chance the Fed keeps rates where they are.