Market prices put a 91% 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.
That outcome would lift both ends of the current range by 25 basis points, or a quarter of a percentage point. The January distribution places the greatest probability on a further step higher.
The current federal funds target range, the central bank's benchmark for overnight lending rates, is 3.75%-4.00%, the Federal Reserve Bank of New York said in data dated Nov. 12.
Kalshi is a US exchange regulated by the Commodity Futures Trading Commission. The quotes came from its live feed at 16:00:36 UTC on Nov. 13, with December contract volume of about 11.2 million.
These are market prices, not a forecast or a survey. The probabilities describe the distribution of outcomes priced through the exchange's contracts at the time the quotes were taken.
For December, the distribution assigns 5.5% to a 4.25%-4.50% range, alongside the 91% probability for 4.00%-4.25%. It assigns 2.5% to keeping the current 3.75%-4.00% range.
The two lower December bands carry equal probabilities. A range of 3.25%-3.50% has a 0.5% probability, while 3.50%-3.75% also has 0.5%.
The implied expected upper end of the December target range is 4.25%. That measure combines the possible outcomes, rather than identifying only the band with the largest probability.
For the Jan. 27, 2027, meeting, the largest probability is 54.3% for a 4.25%-4.50% range. The next largest is 36.4% for 4.00%-4.25%, the band that dominates December pricing.
The January distribution assigns 5.3% to 4.50%-4.75% and 2.6% to the current 3.75%-4.00% range. It gives 1% to 3.50%-3.75%, 0.2% to 3.25%-3.50% and 0.1% to 4.75%-5.00%.
The implied expected upper end rises to 4.40% for January. That is 15 basis points above the December measure and 40 basis points above the current range's upper end.
Each meeting's market prices five possible decisions: a cut of 50 basis points, a cut of 25 basis points, no change, or increases of 25 or 50 basis points.
The target bands combine those probabilities across successive meetings, starting from the current range. January's distribution therefore incorporates the possible December decisions, rather than treating January as a single decision from today's rate.
Further out, the implied expected upper end reaches 4.55% for the March 17, 2027, meeting. Its largest probability is 40.2% for 4.25%-4.50%, followed by 33.9% for 4.50%-4.75%.
