Will 2 Fed rate hikes happen in 2026?

As of August 21, 2026, Polymarket prices “Will 2 Fed rate hikes happen in 2026?” at 60% YES with $145K traded. 1 tracked wallet holds a position here; the dominant side is NO.

Prediction markets put the probability at 16%: Will 2 Fed rate hikes happen in 2026. Currently, markets see this as unlikely (16% YES). Key Takeaway In short, yesterday’s ISM report changed the conversation.

What’s Happening

The probability that the Federal Reserve will implement **2 Fed rate hikes happen in 2026** stands at just **16% YES** as of early August, a sharp repricing from the start of the year when markets had fully priced in at least one cut. The shift follows the **July 29, 2026** ISM manufacturing report, which showed the index climbing to its highest level in four years, signaling renewed price pressures in the goods sector. That data point, combined with the Federal Reserve holding the federal funds rate at **3.50%–3.75%** at both the June and July FOMC meetings, has forced traders to reconsider the path of monetary policy. The last time the ISM gauge reached this threshold, in **2022**, the Fed responded with a series of consecutive hikes, a historical precedent that now weighs on the 2026 outlook. [24/7 Wall St., Aug 04]

The June **FOMC dot plot**, released under new Chair **Kevin Warsh**, revealed a notable internal split: while the committee voted unanimously to hold rates, a growing minority of officials projected at least one quarter-point increase before year-end. Warsh notably abstained from submitting his own dot, leaving the median projection ambiguous but tilting hawkish. This internal shift matters because the market’s baseline assumption entering 2026 was that the next move would be a cut, with any hike pushed to **2027**. The probability of **2 Fed rate hikes happen in** the current calendar year has now risen from near-zero in May to **16%**, reflecting that the debate is no longer about whether the Fed tightens, but how many times. The **U.S.-Iran war** has compounded the issue, with energy and shipping costs feeding into core CPI, which remains sticky above the Fed’s **2%** target. [Chase, Jun 18]

Looking ahead, the **September 2026 FOMC meeting** will be the critical test. The CME FedWatch tool currently assigns a **25% probability** of a hike at that session, up from **10%** a month ago, according to Money Morning’s analysis of fed funds futures. If the August CPI report, due **September 13**, shows another monthly gain above **0.3%**, the odds of **2 Fed rate hikes happen in** 2026 could climb toward **30%**. Conversely, a cooling labor market—nonfarm payrolls have averaged **120,000** over the past three months, down from **180,000** in Q1—could keep the Fed on hold. The key variable is whether the war-driven supply shock proves transitory or persistent; the last comparable episode, the **1973 oil embargo**, saw the Fed raise rates twice within six months. With the yield curve already inverted at the **2-year/10-year** spread by **-35 basis points**, a hike would mark the first tightening cycle initiated during an inversion since **2006**. [Money Morning, Jul 10]

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