The market for the next Fed rate cut has been steadily repricing later through April 2026. Polymarket’s FOMC contracts now assign a 100% probability that the April 28–29 meeting holds rates at 3.50–3.75%, a 94% probability that the June meeting also holds, and an 85% probability that July holds. The first cut, if it arrives at all, has migrated to December — a market-implied 61% probability.
The bigger story is what sits underneath those meeting-by-meeting contracts. The most-likely outcome for total 2026 rate cuts, on Polymarket, is zero, priced at 41%. A single 25bp cut sits second at roughly 30%. Two cuts price below 20%. The probability that the Fed raises rates in 2026 is 13%.
This is a different rates regime than the one CME FedWatch was pricing in January.
The current price stack
| Candidate | Implied | Prob. | Δ pp |
|---|---|---|---|
| April FOMC: no change (3.50–3.75%) | | 100% | — |
| June FOMC: no change | | 94% | — |
| July FOMC: no change | | 85% | — |
| First cut at December meeting | | 61% | — |
| 0 rate cuts in 2026 (most likely) | | 41% | — |
| Year-end 2026 fed funds at 3.75% | | 34% | — |
The shape of this stack tells the whole story. Markets see no near-term action, modest probability of a single late-year cut, and a meaningful tail (13%) where the Fed actually hikes. The implicit forward curve is flatter than the December dot plot.
Why the path repriced later
Three forces have pushed the next Fed rate cut into Q4 — and possibly out of 2026 entirely.
Inflation that didn’t break. March CPI ran 3.3% year-over-year, with services-ex-shelter holding above target. Even with the energy spike treated as transient, core services have not given the Fed permission to cut.
Resilient labor. The +178K March payrolls print made it harder to argue for cuts on growth grounds. Cuts have historically required either inflation cooperation or labor-market deterioration; the Fed has neither.
A Fed Chair transition. The single biggest source of policy uncertainty: Polymarket prices Jerome Powell’s departure from the Fed Chair role at 96% by June 30, with Kevin Warsh as the confirmed successor at 99%. A new Chair tends to introduce a hold-and-evaluate quarter regardless of where the data is.
That third factor is the one most rate models do not capture. A Chair transition changes both the reaction function and the messaging cadence; markets typically widen the rate distribution around it before narrowing again.
Reading the December contract
The 61% probability that the first cut lands at the December meeting is the most important single number on the page. It implies traders see roughly six-in-ten odds that the Fed eases at the very last opportunity in 2026 — and four-in-ten odds that it does not ease at all this year.
If you are using prediction-market data to inform duration positioning, that 61% is the right anchor for late-year pricing. If you are positioning for the September or October meetings, the implicit cut probability is much lower than CME FedWatch has historically reflected.
For the broader macro context, our recession 2026 odds breakdown walks through how the same data is feeding into the recession-probability contract. The two markets are linked: a Fed that cannot cut limits the soft-landing path.
What would pull the cut earlier
Three signals have historically pulled the first-cut date earlier by at least one meeting:
- A core CPI print at or below 2.5% YoY. This is the cleanest single trigger.
- An unemployment uptick toward 4.6%+. A Sahm Rule near-trigger forces a reaction.
- A credit-spread widening of 75bps in IG. Funding-stress signals have pulled FOMC forward in past cycles.
Conversely, the path could push later — into 2027 — on a renewed inflation acceleration or a labor-market reacceleration that revives wage pressure. The 13% rate-hike probability captures this tail.
How CME FedWatch and Polymarket compare on each FOMC meeting
The single best cross-check on Polymarket’s Fed contracts is the CME FedWatch Tool, which builds implied probabilities directly from federal funds futures pricing. The two systems generally agree on near-term FOMC meetings — both currently price the April 2026 meeting at near-100% no-change — but diverge meaningfully on the back half of the year.
April FOMC meeting. Both systems: ~100% no-change. The decision is essentially priced.
June FOMC meeting. CME FedWatch implies roughly 88–92% no-change; Polymarket sits at 94%. The Polymarket consensus is slightly more hawkish.
July FOMC meeting. CME FedWatch implies roughly 70–75% no-change; Polymarket sits at 85%. This is the largest divergence in the front of the curve.
September FOMC meeting. CME FedWatch begins to price meaningful cut probability — roughly 45–50% chance of a cut by September. Polymarket sits closer to 30%, again the more hawkish read.
December FOMC meeting. Both systems converge near a 60% chance that some cut has occurred by year-end. Polymarket prices the first cut at December at 61%; CME FedWatch’s cumulative probability of any cut by December is similar.
The structural reason for the divergence: CME FedWatch is built on futures positioning, which is sensitive to hedging flows and convexity; Polymarket is built on outright directional capital. When the two diverge, the cross-asset signal is usually that hedging flows are pushing one of the two prices off the underlying signal. In the current cycle, traders are pricing the central bank’s reaction function more conservatively than futures markets imply.
What 0 cuts in 2026 would actually mean
The 41% probability of zero rate cuts in 2026 — currently the most-likely outcome on Polymarket — has consequences that extend well beyond the FOMC schedule. Three are worth flagging:
Real interest rates stay elevated. With the policy rate at 3.50–3.75% and core PCE in the high-2s, real rates remain above the long-term neutral estimate of 0.5–1.0%. That sustains pressure on rate-sensitive sectors — housing, commercial real estate, regional bank balance sheets — and keeps the recession-probability contract structurally elevated even when growth data is fine.
The dot plot loses credibility. The December 2025 Summary of Economic Projections priced in 50 basis points of cuts. If the central bank delivers zero, the gap between FOMC communication and FOMC action becomes a market story in its own right — and traders typically widen their reaction-function uncertainty bands as a result.
The yield curve re-flattens or re-inverts. A persistently held front end with no cut path tends to compress 2y/10y term premium. Markets are watching this dynamic closely; any sustained re-inversion would push the recession contract higher by 5–10 percentage points.
The 41% is not just a forecast about FOMC behavior. It is a load-bearing input into the entire 2026 macro-market complex.
How traders should use this
For most readers, the takeaway is that the prediction-market consensus is now meaningfully more hawkish than the December 2025 dot plot suggested. Traders are not pricing the path the Fed itself laid out four months ago. That gap is the trade — either you think markets are right and Fed projections need to come down, or you think the Fed is right and markets are mispriced.
Either way, the next Fed rate cut is no longer an early-2026 question. It is a year-end question, and increasingly a 2027 question. For new readers, our Polymarket explained primer covers how to interpret the prices.
Common questions
When is the next Fed rate cut expected?
Polymarket prices the December 2026 FOMC meeting as the most-likely first-cut date, at 61% probability. The market assigns a 41% chance that the Fed delivers zero cuts in all of 2026.
What does the market price for the April 2026 FOMC meeting?
The April 28–29 meeting is priced at 100% no-change. The fed funds target stays at 3.50–3.75%. The June and July meetings are priced at 94% and 85% no-change respectively.
Will Jerome Powell still be Fed Chair?
Polymarket prices Powell's departure from the Fed Chair role at 96% by June 30, 2026, with Kevin Warsh confirmed as the successor at 99%. The Chair transition is one of the largest sources of near-term policy uncertainty.
Could the Fed actually raise rates in 2026?
Polymarket assigns a 13% probability to a Fed rate hike in 2026. That is small but not negligible — and it largely reflects scenarios where inflation reaccelerates rather than the Fed switching reaction functions.
How does this compare to CME FedWatch?
Polymarket and CME FedWatch broadly agree on near-term meetings but Polymarket has been pricing the 2026 path slightly more hawkish than FedWatch since mid-March, particularly on the September and October meetings.
What would force a cut earlier than December?
A core CPI print at or below 2.5% year-over-year, an unemployment move toward 4.6%, or a 75bp+ widening in investment-grade credit spreads have all historically pulled the first-cut date earlier by at least one meeting.
