The Federal Reserve's target range has a market-implied 72.7% probability of reaching 4.00%-4.25% at its Dec. 9 meeting, based on prices from US prediction exchange Kalshi.
That outcome would put the range 25 basis points above the current 3.75%-4.00%, which the Federal Reserve Bank of New York identified as the target on Nov. 2. A basis point is one-hundredth of a percentage point.
Kalshi is a US exchange regulated by the Commodity Futures Trading Commission. The quotes came from a live feed at 16:01:46 UTC on Nov. 3, with contract volume of about 2.7 million for the nearest meeting.
The probabilities are market prices, not a forecast or a survey. Each meeting's market prices five possible decisions: cuts of 50 or 25 basis points, no change, or increases of 25 or 50 basis points. The target-range distributions combine those probabilities across successive meetings, starting from the current range.
For December, Kalshi's distribution assigned a 24.9% probability to the current 3.75%-4.00% range and 1.5% to 4.25%-4.50%. The two lower ranges, 3.25%-3.50% and 3.50%-3.75%, each carried a 0.5% probability. The implied expected upper bound, the probability-weighted average of the possible range ceilings, was 4.18%.
At the Jan. 27, 2027, meeting, the 4.00%-4.25% band remained the most likely outcome at 57.5%. The distribution put 19.7% on 4.25%-4.50% and 19.5% on the current 3.75%-4.00% range. The 3.50%-3.75% and 4.50%-4.75% bands each had a 1.4% probability, while 3.25%-3.50% carried 0.5%.
The implied expected upper bound for January was 4.25%, seven basis points above December's 4.18%. The most likely band was the same at both meetings, although January's distribution assigned a smaller probability to it and a larger probability to 4.25%-4.50%.
By the March 17, 2027, meeting, the two largest probabilities were nearly equal. The 4.00%-4.25% range carried 35.8%, compared with 35.6% for 4.25%-4.50%. The current 3.75%-4.00% range had a 12.7% probability, followed by 11.2% for 4.50%-4.75%.
The remaining March probabilities were 2.7% for 3.50%-3.75%, 1.2% for 4.75%-5.00% and 0.6% for 3.25%-3.50%. The 3.00%-3.25% and 5.00%-5.25% bands each carried 0.1%. The implied expected upper bound was 4.36%, 11 basis points above January's level.
The New York Fed's current-range information was dated Nov. 2, one day before the market quotes.
