Will the upper bound of the target federal funds rate be 3.5% at the end of 2026?

As of September 1, 2026, Polymarket prices “Will the upper bound of the target federal funds rate be 3.5% at the end of 2026?” at 6% YES with $204K traded. No tracked wallet holds a position on this market, so there is no verdict.

Prediction markets put the probability at 8%: Will the upper bound of the target federal funds rate be 3.5% at the end of 2026. Currently, markets see this as unlikely (8% YES).

What’s Happening

The upper bound of the target federal funds rate stands at 3.75% as of July 1, 2026, unchanged since the December 11, 2025 cut that concluded a 75-basis-point easing cycle over the prior twelve months. The current market pricing assigns only an 8% probability that the upper bound of the target federal funds rate be 3.5% at the end of 2026, reflecting a stark reversal from earlier easing expectations. Bloomberg Economics now forecasts the upper bound of the target federal funds rate be 3.75% at the end of 2026, with a further cut to 3.5% delayed until end-2027, as the Federal Reserve under new Chair Kevin Warsh pivots toward a more hawkish stance amid persistent inflation pressures [Bloomberg, Mon Jul 06].

The shift in trajectory follows a dramatic policy reversal: the FOMC lowered rates six times from September 2024 through December 2025, moving the range from 4.5% to the current 3.50%-3.75% band. However, President Donald Trump's public pressure on Warsh for rates of 1% or lower has been met with resistance, as the new Fed chair prioritizes inflation containment over political expediency. The June 17, 2026 FOMC meeting left rates unchanged, and traders now price a 20% chance of a second quarter-point hike by year-end, with the first full hike already fully priced into futures contracts [Cryptoslate, Tue Jul 14]. This hawkish repricing has broad implications for consumers, as high-yield savings account rates that peaked during the 2023-2024 tightening cycle face renewed upward pressure rather than the anticipated decline [247wallst, Thu Jul 02].

The market's 92% NO probability reflects a fundamental reassessment of the Fed's reaction function under Warsh, who inherited an economy with nearly 3% inflation and 4.5% unemployment as of late 2025. The December 8-9, 2026 FOMC meeting serves as the key resolution date, with the contract requiring the upper bound of the target federal funds rate be 3.5% or lower at that point. The last time the Fed held rates at 3.75% for an extended period was mid-2025, when three-year Treasury yields at 3.56% signaled market skepticism about aggressive easing [Rsmus, Thu Dec 04]. With Trump already publicly criticizing Warsh in June 2026, the political-economic tension suggests the Fed will maintain its current range through year-end, making the 3.5% upper bound increasingly unlikely without a major disinflationary shock [Finance, Tue Jun 02].

Traded on Polymarket — $204K Volume