Market Predicts Near-Certain Rate Cut: Traders Show Overwhelming Confidence
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The outlook for the Federal Reserve’s next move is becoming increasingly clear. The market’s prediction now shows near certainty of a 25-basis-point rate cut.
As it stands, once a cautious possibility, the cut is now seen as a high-probability event. Platforms like Polymarket and Kalshi reflecting overwhelming confidence in the decision.
Polymarket and Kalshi Align on Rate Cut Expectations
Polymarket’s key contract now gives an 84% probability to a 25-bps cut, a significant jump from just 66% five days ago. Its alternative markets—tracking the potential for dissenting votes—indicate that a 25-bps cut with multiple dissenters is 63% likely, while a cut with fewer dissenters is close to 60%. The chance of a “no-change” outcome has dramatically decreased, now lingering between 12% and 16%.
Similarly, Kalshi echoes these predictions, assigning an 84% chance to the quarter-point cut while placing just 18% odds on a rate hold. To this end, any rate move beyond a standard 25-bps cut is considered highly unlikely.
CME’s FedWatch Tool Supports Rate Cut Narrative
At the moment, the CME’s FedWatch Tool has strengthened the narrative. The tool is showing an 84.9% likelihood of the Fed lowering its target range to 350–375 basis points in the upcoming December meeting, down from the current range of 375–400.
As it stands, this marks a sharp increase from the 71% probability shown just a week ago. Also, this is solidifying marketplace expectancies for a modest price cut. With liquidity conditions, holiday trading, and broader economic uncertainty all contributing to the current environment. To this end, the quarter-point reduction is now visible as the maximum probably outcome.
Despite the ongoing mixed signals and policy caution from the central bank, the market is becoming increasingly unified in its belief that the Fed will act with a modest reduction. Whether the Fed ultimately follows through remains to be seen, but for now, traders appear confident, with all signs pointing to a significant policy shift in the near future.
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