Will the Fed decrease interest rates by 25 bps after the December 2026 meeting?

Prediction markets put the probability at 8%: Will the Fed decrease interest rates by 25 bps after the December 2026 meeting. Currently, markets see this as unlikely (8% YES).

What’s Happening

The question of whether the fed decrease interest rates by 25 bps after the december meeting comes as policymakers signal a prolonged pause into 2026. At its December 10, 2025 meeting, the Federal Open Market Committee delivered a widely expected 25-basis-point cut but flagged only one additional reduction next year, a stance analysts characterized as "semi-dovish, cautious." The decision exposed a deep divide on the Committee, with a wide range of policymaker views on the rate outlook amid a slow release of traditional economic data. Growth had rebounded, tempering the case for aggressive easing heading into the new year. [Reuters, Dec 10]

Inflation remains the central constraint. Personal Consumption Expenditures (PCE), the Fed's preferred gauge, is projected to level off near 3% before receding to 2.6% and 2.1% in 2027 — still above the 2% target — while median core PCE was pegged at 3.1%. The current cycle began with the first cut since December in September 2025, yet the FOMC has stayed cautious: at that meeting, nine of 19 members anticipated no further cuts. That split explains why the odds of the fed decrease interest rates by 25 bps after the december meeting sit low, near 8%, as gradual disinflation limits room to ease. [CBS News, Sep 17]

Looking ahead, forecasters have pushed easing further out. J.P. Morgan now anticipates a 2027 Fed hike, expecting the labor market to tighten by the second quarter with disinflation "quite gradual." Goldman Sachs and Barclays, which had penciled in March and June cuts, revised to reductions in September and December following a mid-year move. Traders assigned a 95% chance the Fed holds at its January meeting per the CME FedWatch tool. Against that backdrop, whether the fed decrease interest rates by 25 bps after the december meeting hinges on labor-market softening and a clearer path toward target inflation. [Reuters, Jan 12]

Traded on Polymarket — $50K Volume

Lower-volume market on Polymarket ($50K). Wider spreads expected — enter with limit orders and be aware of slippage risk. Currently 8c YES.