Fed rate cut by October 2026 meeting?

Prediction markets put the probability at 5%: Fed rate cut by October 2026 meeting. Currently, markets see this as unlikely (5% YES). How many Fed rate cuts are expected in 2026? The outlook for rate cuts next year is less clear.

What’s Happening

The odds of a fed rate cut by October meeting have collapsed as the Federal Reserve holds its benchmark rate in a target range of 3.50%-3.75%, unchanged since the last cut in December 2025. Inflation has been the decisive obstacle: the Consumer Price Index accelerated to an annual rate of 4.2% in May 2026, the highest reading since April 2023, driven higher by oil and gas prices following the outbreak of the Iran war in late February. With price pressures reigniting, the debate among economists has shifted from the size of cuts toward whether the next move could be a hike. [CBS News, Jun 16]

The repricing has been swift. In late April 2026, the probability of any 2026 rate cut fell toward 3% in a single session, down from over 18% a day earlier, as the central bank kept rates on hold at a meeting that surprised no one. Analysts noted that markets no longer expect easing to resume until 2027. The picture matters beyond the fed funds rate itself: for long-duration credit such as auto loans, the more relevant benchmark is longer-term Treasury yields—often the 5-year note—rather than the Fed's overnight rate, meaning the fading prospect of a fed rate cut by October meeting transmits unevenly across borrowing costs. [Morningstar, Apr 29]

Forecasts are now split. After the July hold—Kevin Warsh's first meeting as Fed chair following Jerome Powell's departure—J.P. Morgan brought forward its call to a rate hike in December, while Citigroup, a long-standing dove, maintained a forecast for cuts in October and December plus one in January 2027. Goldman Sachs Research expects US growth to accelerate to 2-2.5% in 2026 as tariff drag fades, with unemployment stabilizing modestly above the 4.4% logged in September. That mix of firm growth and hot inflation leaves a near-term easing as an outlier scenario against a base case of extended holds. [Reuters, Jul 30]

Traded on Polymarket — $113K Volume

Polymarket prices this at 5c YES with $113K in volume. Moderate liquidity — use limit orders for positions above $1K to avoid moving the price.