Economy / 2 MIN READ
Traders dismiss prospect of aggressive December 2027 tightening as major banks forecast rate cuts instead.
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Current live odds
Will the Federal Reserve Hike rates by >25bps at their December 2027 meeting?
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Prediction markets now assign just a 1.5 percent probability to the Federal Reserve raising interest rates by more than 25 basis points at its December 2027 meeting, down 47 basis points in a single day on $3 of trading volume. The sharp decline reflects a widening consensus among economists and strategists that the central bank will be easing, not tightening aggressively, by the end of next year.
Goldman Sachs Research projects the Fed will deliver its final two rate cuts of the current cycle in June and December 2027, lowering the target range to 3.0–3.25 percent, and characterizes additional hikes as unlikely though not impossible. A Bloomberg survey of 35 economists echoes that view, anticipating reductions beginning in June 2027 and another cut in December 2027 to reach the same 3.0–3.25 percent range by year-end. J.P. Morgan Global Research expects the Fed to remain on hold through 2026 before delivering a single 25 basis point hike in September 2027, with no forecast for a larger move thereafter.
The divergence between economist surveys and some futures-based commentary has kept conditional probabilities volatile. CME FedWatch, which infers odds from 30-Day Fed Funds futures, remains the primary tool for tracking rate-change expectations at specific FOMC meetings. An earlier Kalshi snapshot showed traders pricing roughly a 32 percent probability of a standard 25 basis point hike at the December 2027 meeting, underscoring how quickly sentiment can shift. Social-media analysis of futures pricing has highlighted a March 2027 tilt toward hikes over cuts, but no widely cited scenario envisions a jumbo move 18 months out.
In a recent decision under Chair Kevin Warsh, the Fed unanimously held the target range at 3.5–3.75 percent and projected at least one 25 basis point increase by the end of 2026, signaling a cautious, incremental approach. Al Jazeera reported that some forecasters expect a rate increase around late 2026 or early 2027, yet also note expectations for a December 2027 cut, illustrating the disagreement on the late-2027 policy path. Late-cycle decisions remain highly sensitive to unforeseen inflation or growth shocks, leaving the door open for surprises even as markets bet heavily against aggressive tightening.