Prediction markets now price a 19.95% probability that the Federal Reserve will raise interest rates by 25 basis points at the conclusion of its July 28-29 meeting, a decline of 5.4 percentage points over the past 24 hours. The move extends a retreat from a peak of roughly 38% on the CME FedWatch tool earlier this month, as traders reassess the likelihood of a hike against a backdrop of mixed economic data and ongoing geopolitical uncertainty in the Middle East.
The July 29 policy announcement remains the immediate catalyst for the market, but the base case among economists surveyed by FactSet is a hold at the current 3.50% to 3.75% target range. Reuters reported on June 25 that market-implied odds for a July hike had fallen to about 30% from nearly 40% earlier that day, and the latest pricing suggests further erosion of confidence in a near-term move. The Federal Reserve's July 10 Monetary Policy Report provided the most recent official backdrop, signaling caution amid persistent inflation and renewed conflict in the Strait of Hormuz.
A July 8 Forbes report noted that June FOMC minutes indicated no rate cuts until 2027, while some traders had begun pricing higher odds of a hike by the September 15-16 meeting. That timeline suggests the central bank may prefer to wait for additional data before tightening, even as the probability of a September hike has climbed to roughly 80% in some market measures. The divergence between July and September pricing underscores the view that the Fed is likely to hold steady this month while leaving the door open for action later in the year.
The 24-hour trading volume of $164,620 on the Polymarket contract reflects active repositioning ahead of the decision, with the probability decline concentrated in the past day. The shift aligns with a broader pullback in rate-hike expectations across federal funds futures, as traders weigh the impact of recent economic reports and the potential for further escalation in the Gulf of Oman. With the FOMC statement due at 2:00 p.m. ET on July 29, the next three days will determine whether the market's current skepticism proves prescient or premature.