With roughly four weeks to the December 8-9 FOMC meeting, prediction markets have decisively repriced the path of US monetary policy. Kalshi’s benchmark “Fed cuts 25 bps at the December 2026 FOMC” contract closed Monday at 71 cents, up from 58 cents just ten days ago, after Friday’s cooler-than-expected PCE print and softer-than-forecast October payrolls. Traders are now treating a December cut as the base case, but the tail bets, on a surprise hold or a shock 50 bps move, are where the richest positioning is building. Here is what the regulated and on-chain contracts are saying.
The December Meeting: A 71 Percent Cut, Priced Clean
The flagship Kalshi contract on a 25 basis point cut at the December FOMC sits at 71 percent, with “no change” trading at 24 percent and “50 bps cut” at 4 percent. The pricing lines up closely with the CME FedWatch tool, which had a 73 percent implied probability of a quarter-point cut as of Monday’s close, so there is no meaningful cross-venue arbitrage on the mainline bet.
What is interesting is the distribution underneath. Open interest on the Kalshi FOMC market crossed $11.2 million over the weekend, the second-highest in the contract’s history, and two-thirds of that notional is on the “cut” side. The “no change” bettors have been quietly rebuilding since Powell’s measured language at the October presser, and the contract has moved almost exclusively on data: each softer print tightens the “cut” probability by two to four points, each firmer print loosens it by a similar amount.
The Terminal Rate Through 2027
Beyond December, prediction markets are drawing a more dovish 2027 path than the September dot plot implied. Kalshi’s “Fed funds target range below 3.25 percent by end of 2027” contract trades at 46 percent, up from 34 percent a month ago. The parallel “below 3.00 percent” contract sits at 23 percent. Current target range is 3.75 to 4.00 percent, so the market is effectively pricing between two and three additional cuts over the next thirteen months.
The Polymarket mirror of the same question, structured as “Fed funds effective rate below 3.5 percent on Jan 1, 2028,” is priced at 52 percent with just over $4 million of open interest. The gap between the Kalshi and Polymarket readings is more about contract construction, Kalshi uses the upper bound of the target range while Polymarket references the effective rate, than genuine disagreement, but arbitrageurs who have modeled the spread cleanly have found roughly 90 basis points of edge in the tails.
What Could Derail the Cut
The two event markets that would meaningfully reprice the December cut are the November CPI release on December 10, which lands the morning after the FOMC decision, and the November employment report on December 5. The “November core CPI above 0.3 percent month-over-month” Kalshi contract is at 29 percent, and the “November nonfarm payrolls above 180,000” contract is at 31 percent. Both are priced below the 2026 average, so a firmer-than-expected print on either release would be the single most likely catalyst for a cut delay.
Shutdown risk has receded as a meaningful variable. The “US government shutdown active on Dec 9” contract is trading at just 12 percent after last week’s continuing resolution passed the House, down from a peak of 38 percent in late October. Traders have effectively unwound the shutdown tail from the FOMC book.
The 50 Basis Point Wildcard
The 4 percent probability on a 50 basis point cut looks like a throwaway, but it has drawn close to $700,000 of open interest, almost all of it bought in the last two weeks. The thesis is narrow: a sharply weaker November jobs print, or a disorderly move wider in credit spreads over the next three weeks, would force the committee to signal more urgency than a quarter-point delivers. The expected value on the contract is slim, but the payoff profile, roughly 25-to-1 if it hits, explains the steady bid.
Volatility traders on Deribit have been expressing a similar view through downside skew in SOFR options, and the implied probability of a 50 bps cut from front-month SOFR futures is closer to 7 percent, versus the 4 percent on Kalshi. For a trader with access to both venues, that gap is the cleanest Fed-related cross-market trade on the board right now.
Where to Trade These Markets
Every contract referenced above is listed on Kalshi, which has become the de facto US venue for regulated, dollar-settled FOMC and macro prediction markets. The full suite covers each FOMC meeting through 2028, year-end terminal rate ranges, individual CPI and payrolls releases, and the full menu of Fed communication events. Liquidity on the next-meeting cut contract is now consistently above $10 million of open interest.
For traders who want to pair Fed bets with election, geopolitical, or crypto outcomes in a single book, Polymarket carries parallel versions of most of the headline rate contracts with USDC settlement. For a complete view of fees, resolution criteria, and liquidity across every regulated and on-chain venue, see our live ranking of the best prediction markets of 2026. One rule of thumb before sizing any FOMC trade: always read the exact resolution source, Kalshi contracts settle on the upper bound of the target range, and that mechanical detail is where the uninformed money leaks edge.