Fed rate cut by September 2026 meeting?

Prediction markets put the probability at 42%: Fed rate cut by September 2026 meeting. Currently, markets are divided (42% YES, 58% NO). BENGALURU, April 22 (Reuters) - The U.S.

What’s Happening

The probability of a Federal Reserve rate cut by the September 2026 Federal Open Market Committee (FOMC) meeting currently stands at 42%, according to market data, reflecting a sharp reversal from earlier expectations. This shift follows a Reuters poll of 103 economists conducted between April 17-21, 2026, which found that a slim majority—56 respondents—now expect the Fed’s benchmark rate to remain steady in the 3.50%-3.75% range through the end of September. The primary driver is war-driven energy shocks, which have reignited inflation pressures and pushed the timeline for any potential fed rate cut by September meeting further into late 2026. The poll marks a significant reversal from earlier in the year, when nearly 70% of economists had anticipated at least one reduction by that same period. [Kitco, Apr 22]

The geopolitical backdrop has fundamentally altered the inflation outlook, with the ongoing conflict against Iran driving energy costs higher and creating supply-chain disruptions. Fed Chair Jerome Powell, during the March 2026 FOMC meeting press conference, explicitly warned that tariffs and the war would "push up overall inflation," a statement that has since been validated by rising consumer price data. The Consumer Price Index (CPI) for March came in above consensus, while the Personal Consumption Expenditures (PCE) price index—the Fed’s preferred inflation gauge—remained sticky above the 2% target. This has forced the central bank to maintain its current rate of 3.50%-3.75%, with the April 29 FOMC meeting widely expected to result in no change. The probability of a fed rate cut by September meeting has thus fallen from over 60% in early March to its current 42%, as markets price in a longer hold period. [Forbes, Apr 26]

Looking ahead, the key variable remains the trajectory of energy prices and the labor market. The April employment report, due in early May, will be closely scrutinized for signs of softening, as the Fed balances inflation risks against potential economic slowdown. The yield curve has flattened, with the 2-year Treasury yield hovering near 3.80% and the 10-year yield at 4.10%, signaling investor uncertainty about the pace of future easing. Additionally, political dynamics are adding complexity: President Donald Trump stated in a Fox Business interview that he would not drop the investigation into Chair Powell, raising questions about the Fed's independence as the Powell-Warsh transition looms. For the fed rate cut by September meeting to materialize, economists say inflation would need to show sustained declines for at least two consecutive months, a scenario that appears increasingly unlikely given current energy trends. [USA Today, Apr 27]

Traded on Polymarket — $85K Volume

Lower-volume market on Polymarket ($85K). Wider spreads expected — enter with limit orders and be aware of slippage risk. Currently 42c YES.