As the Fed approaches its first interest rate decision in 2026, market expectations are clearly reflected in prediction markets.
The most likely scenario for the Fed to set interest rates on January 28, 2026 is for rates to remain unchanged, according to Polymarket data.
According to forecast contracts traded on Polymarket, the probability that interest rates will not change is overwhelmingly high, at 85%. The price factored in for a 25bp rate cut is 15%, but a 50bp or more rate cut would be at a very low level of 1%. The scenario of rising interest rates has been almost completely ruled out by the market, with a probability of less than 1%. Interest rate decisions will be made in the Fed’s official statement after the Federal Open Market Committee (FOMC) meeting on January 27-28, 2026.
On the Fed’s side, evaluations of the economic outlook and income distribution are attracting attention. In a speech at the Yale University CEO Summit on December 16, Christopher Waller highlighted the deteriorating income distribution, saying that while conditions are favorable for retailers and companies that serve high-income groups, the bottom half of the population is being severely affected by the economic situation. Waller said the Fed’s priorities are to strengthen the labor market and support economic growth, a process that must balance job security and wage growth over the long term.
*This is not investment advice.
