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Prediction-market traders are increasingly expecting the Federal Reserve to leave interest rates unchanged at its September meeting. Polymarket’s “Fed Decision in September?” market showed a 74% probability of no change on August 17, compared with a 25% chance of a quarter-point increase and roughly 1% odds of a cut.
The Polymarket contract had attracted about $33.9 million in trading volume. Kalshi showed similar expectations at 73.5% for no change, while Myriad traders put the probability at around 71%.
Recent Data Reduces Rate Hike Expectations
Expectations for a September increase have declined following softer U.S. economic data. Unexpected job losses in July, lower-than-expected consumer inflation and weaker retail sales have pushed market pricing toward another hold.
Producer prices were also unchanged in July, compared with economists’ expectations for a 0.2% increase. CME futures were pricing a 67.6% probability of unchanged rates on August 13, up as expectations for a September hike declined. HSBC U.S. economist Ryan Wan said softer activity data could move more policymakers toward waiting for additional information before raising rates. He also said,
“The debate clearly is about the possibility of rate hikes.”
Fed Held Rates in Divided July Vote
The Fed kept its benchmark federal funds rate at 3.50% to 3.75% on July 29. The decision passed by a 9-3 vote, with Beth Hammack, Neel Kashkari and Lorie Logan dissenting in favor of a quarter-point increase.
Inflation remains above the Fed’s 2% goal, meaning another increase has not been ruled out. A poll conducted August 12-17 found that 94 of 104 economists expected rates to remain unchanged in September.
September Decision Set for September 16
The Federal Open Market Committee will meet on September 15 and 16, with its policy statement scheduled for September 16. The meeting will also include updated economic projections.
Prediction-market probabilities can continue changing before that decision as traders respond to inflation, employment, and other economic data. For now, markets including Polymarket, Kalshi and Myriad all place an unchanged September rate as the most likely outcome.
