Market prices put a 73.6% probability on the Federal Reserve raising its target interest rate range to 4.00%-4.25% at its Dec. 9 meeting, according to US prediction exchange Kalshi.
The same range remained the most likely outcome for Jan. 27, 2027, although its probability fell to 59.3%. The probability of a higher 4.25%-4.50% range increased between the two meetings.
Kalshi is a US exchange regulated by the Commodity Futures Trading Commission. The live-feed quotes were taken at 16:01:46 UTC on Nov. 7, with contract volume for the December meeting at 4.37 million.
These are market prices, not a forecast or a survey. The rate-band probabilities combine the prices of successive meeting outcomes, starting from the current target range.
The current federal funds target range, the band the Fed sets for overnight lending between banks, was 3.75%-4.00% as of Nov. 5, the Federal Reserve Bank of New York said. The date of its last change was unavailable.
For December, the current range carried a 23.6% probability. That compared with 1.4% for 4.25%-4.50%, 1% for 3.50%-3.75% and 0.5% for 3.25%-3.50%, completing the distribution alongside the most likely band.
The December prices implied an expected upper bound of 4.19%. That measure refers to the top of the target range, rather than its midpoint or the rate at which banks actually lend.
For January, the current 3.75%-4.00% range carried a 20.2% probability, while 4.25%-4.50% carried 16.6%. The remaining probabilities were 2% for 3.50%-3.75%, 1.4% for 4.50%-4.75% and 0.5% for 3.25%-3.50%.
The January distribution implied an expected upper bound of 4.23%. The most likely band was unchanged from December, while the expected upper bound was four basis points higher, or 0.04 percentage point.
By March 17, 2027, the probability of 4.00%-4.25% fell to 40.9%, still the largest share. The 4.25%-4.50% band followed at 31.6%, while the current 3.75%-4.00% range carried 14.6%.
The other March probabilities were 8.1% for 4.50%-4.75%, 3% for 3.50%-3.75%, 0.9% for 4.75%-5.00%, 0.7% for 3.25%-3.50% and 0.1% for 3.00%-3.25%. The implied expected upper bound reached 4.32%.
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. Combining those probabilities across meetings produces the wider set of possible rate bands for January and March.
