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

As of September 2, 2026, Polymarket prices “Will the Fed increase interest rates by 25 bps after the December 2026 meeting?” at 60% YES with $172K traded. No tracked wallet holds a position on this market, so there is no verdict.

Prediction markets put the probability at 44%: Will the Fed increase interest rates by 25 bps after the December 2026 meeting. Currently, markets are divided (44% YES, 56% NO).

What’s Happening

Trading on Polymarket shows a **44% probability** that the Federal Reserve will increase interest rates by 25 basis points after the December 2026 meeting, against a **56%** chance of no move. This contrasts sharply with the central bank's own guidance from **January 2026**, when RBC Economics projected the fed funds rate would remain pinned at **3.5%-3.75%** for the entire year following a single 25-bps cut in December 2025. The shift in market pricing reflects a dramatic reversal from the easing bias that dominated Fed communications through late 2025, when Chair Jerome Powell characterized the December cut as a "close call" and emphasized labor market weakness as the primary justification for policy loosening [RBC, Jan 14].

The probability of the Fed increase interest rates by 25 bps after the December meeting has been driven by inflation dynamics tied to the **Iran war**, which began escalating in **April 2026**. According to Business Insider, odds of a hike at least 25 basis points surged on **Monday, May 5**, following Powell's post-meeting warning on **April 29** that prices could "go much higher" the longer the conflict persists. The CME FedWatch tool simultaneously showed tumbling odds for any rate cut through the remainder of 2026, a stark reversal from **December 10, 2025**, when FactSet surveys indicated a **62% probability** the Fed would hold steady at its January meeting and markets priced in only one 25-bps cut for all of 2026 [Business Insider, May 5].

Historical precedent suggests that when the Fed pivots from easing to tightening, it typically follows a sustained inflation shock rather than a single data point. The **December 2026 meeting** is scheduled for **December 9**, according to the active Polymarket contract, which has drawn **$5,500** in volume. Reuters reported on **December 10, 2025** that Powell explicitly stated the Fed sees "only one rate cut in 2026; no hike ahead," yet that projection was made before the Iran conflict disrupted energy markets. Key indicators to watch include the **August 2026 CPI** report, due in mid-September, and the **September 2026 employment situation** summary from the BLS. Goldman Sachs has noted that core inflation excluding food and energy will be the decisive variable, with tariffs and supply-chain disruptions potentially forcing the Fed to abandon its "neutral stance" guidance and implement the first hike since **July 2023** [Reuters, Dec 10].

Traded on Polymarket — $172K Volume