The Betting Markets Smell a Rate Cut

If you want to know what people really think about the Federal Reserve's next move, follow the money. And right now, the money on prediction markets is flowing heavily toward a December rate cut.

On Polymarket, a decentralized prediction platform, the odds of a 25 basis point cut have rocketed to 81%. That's up sharply from 67% just a day earlier and 44% a week ago. Meanwhile, the probability that rates stay put in their current 3.75%-4.00% range has crashed from 30% to just 18% in 24 hours.

A more aggressive 50 basis point cut? The market gives that a measly 2% chance.

Over $159 million has been wagered on how this plays out. The Federal Open Market Committee meets December 10 for its final decision of the year, and traders are placing their bets accordingly.

Over at Kalshi, a federally regulated prediction platform, bettors are pricing in similar 81% odds for a 25 basis point decrease. The CME FedWatch tracker, which uses futures market data, estimates an 84% probability of a quarter-point cut. So whether you're looking at crypto-based betting markets or traditional financial instruments, the consensus is pretty clear.

What Changed? Fed Officials Started Sounding Friendlier

The surge in rate cut expectations follows dovish comments from key Fed officials, including Governor Christopher Waller and New York Fed President John Williams. Markets love nothing more than central bankers hinting at easier policy, and both stock and cryptocurrency markets rallied on the news. Bitcoin (BTC) pushed higher alongside equities.

Goldman Sachs chief economist Jan Hatzius weighed in, saying the delayed September jobs report "may have sealed a 25 bps cut at the December 9–10 FOMC meeting." When Goldman's top economist says something is sealed, people listen.

Even legendary Wall Street investor Bill Gross is projecting a rate cut next month, adding more credibility to the consensus view that the Fed will ease policy before year-end.