The Federal Reserve's Dec. 9 decision carried a market-implied probability of 71.9% for a target interest rate range of 4%-4.25%, above the current range, according to prices from Kalshi.
The same range remained the most likely outcome for Jan. 27, 2027, although its probability fell to 57%. The implied expected upper limit rose 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 Oct. 30, with contract volume for the December meeting at about 2.34 million.
These 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 probabilities come from chaining those decisions forward from the current range. For later meetings, they therefore reflect the combined paths through earlier decisions, rather than just the size of a single meeting's change.
The current federal funds target range, the central bank's benchmark range for overnight lending between banks, was 3.75%-4% as of Oct. 29, the Federal Reserve Bank of New York said. The date of its last change was unavailable.
For December, the current range carried a 24.6% probability. A range of 4.25%-4.5% carried 2.5%, while 3.25%-3.5% and 3.5%-3.75% each carried 0.5%.
The December distribution's implied expected upper limit was 4.19%, or 19 basis points above the current upper limit. That measure combines the possible outcomes rather than identifying the single most likely range.
For January, the 4.25%-4.5% range carried a 20.6% probability, followed by 18.6% for the current range. The 4.5%-4.75% range carried 2.1%.
Lower January ranges of 3.5%-3.75% and 3.25%-3.5% carried probabilities of 1.2% and 0.5%, respectively. The 4.75%-5% range carried 0.1%.
The implied expected upper limit for January was 4.26%, seven basis points above December's level. The most likely range and the expected upper limit measure different features of the distribution.
By March 17, 2027, the most likely range shifted to 4.25%-4.5%, at 36.4%, narrowly ahead of 35.6% for 4%-4.25%. The implied expected upper limit reached 4.36%.
The current range carried 12.1% for March, followed by 11.4% for 4.5%-4.75%. The remaining probabilities were 2.5% for 3.5%-3.75%, 1.3% for 4.75%-5%, 0.6% for 3.25%-3.5%, and 0.1% for 5%-5.25%.
