Fed rate cut by December 2026 meeting?

Prediction markets put the probability at 14%: Fed rate cut by December 2026 meeting. Currently, markets see this as unlikely (14% YES). The structure of this market is a calendar problem before it is an economics problem.

What’s Happening

The probability of a Fed rate cut by the December 2026 meeting stands at just 14%, reflecting a dramatic reversal from the start of the year when futures markets priced in multiple easings. The Federal Reserve has held its target range at 3.50%-3.75% since the December 2025 cut, with all five scheduled 2026 meetings—January, March, April, June, and July—ending in holds. The central bank's own December projections penciled in one cut for 2026, but the outbreak of the Iran war in late February upended that outlook, pushing the Consumer Price Index to an annual rate of 4.2% in May, the highest reading since April 2023 [CBS News, Jun 16]. Core Personal Consumption Expenditures inflation was tracking at 2.8% year over year in the most recent data, well above the Fed's 2.5% projection for 2026, making the case for any near-term easing increasingly difficult [Axios, Jun 08].

The market's 86% NO probability reflects a structural shift in Fed leadership and geopolitical realities. Kevin Warsh presided over his first Federal Reserve interest rate meeting on June 16-17, succeeding Jerome Powell, and the FOMC has shown remarkable unanimity in holding rates—at the April meeting, 11 of 12 members voted for no change, with only Stephen Miran dissenting in favor of a cut [Morningstar, Apr 29]. The calendar itself constrains the market: only three meetings remain in 2026—September 15-16, October 27-28, and December 8-9—and every one so far has ended in a hold [Oddsshopper, Aug 04]. J.P. Morgan has gone further, bringing forward its call for a rate hike to December, while Citigroup remains the lone major bank forecasting cuts in October and December [Reuters, Jul 30].

The implications of a 14% probability are significant for rate-sensitive assets and the broader yield curve. If the Fed holds through December, it would mark the longest pause since the 2023-2024 cycle, when rates sat at 5.25%-5.50% for over a year before the September 2024 easing began. The bond market has already adjusted: two-year Treasury yields have climbed as inflation expectations re-anchor higher, and the probability of a hike now exceeds the probability of a cut in some short-dated contracts. The key data points to watch are the August and September CPI reports, due before the October meeting, and the September FOMC's Summary of Economic Projections, which will reveal whether the median official still expects any easing in 2026. With core inflation running nearly a full percentage point above target and energy prices elevated, the burden of proof for a December cut rests on a rapid disinflation that, as of early August, shows no signs of materializing [Axios, Jun 08].

Traded on Polymarket — $268K Volume

Polymarket prices this at 14c YES with $268K in volume. Moderate liquidity — use limit orders for positions above $1K to avoid moving the price.