As President Donald Trump continues to heap pressure on Federal Reserve Chair Jerome Powell, traders are heavily leaning toward a modest rate cut at the upcoming September FOMC meeting. According to CME FedWatch data, the probability of a 25-basis-point reduction now stands at 85.7%, making it the clear favorite in the market's playbook.
Polymarket and Kalshi Traders Bet Big on a 25-Basis-Point Cut
On the decentralized prediction market Polymarket, traders assign a 73% probability to a 25-basis-point cut in September. A more aggressive 50-plus-point reduction trails far behind at just 8%, while the “no change” scenario holds a 20% chance. A rate hike is virtually nonexistent at 1%, signaling that market participants overwhelmingly expect a small, measured trim rather than any bold move.
On the U.S.-regulated prediction platform Kalshi, the odds are similar: a 72% probability of a 25-basis-point cut, a 19% chance of rates staying put, and only a 9% likelihood of a deeper cut exceeding 25 basis points. The outlook mirrors Polymarket’s, reinforcing expectations of a modest, calculated policy adjustment.
CME FedWatch Data Strengthens Rate-Cut Conviction
CME FedWatch, which tracks the implied probability of Fed rate moves based on 30-day Fed Funds futures pricing, shows that traders assign an 85.7% probability to the Fed reducing the target range by 25 basis points to 4.00%-4.25% at the September 17-18 FOMC meeting. The odds of holding steady at the current 4.25%-4.50% range are just 14.3%, reflecting strong market conviction that a modest cut is coming.
The last time the Fed cut rates was December 18, 2024, and since taking office, Trump has made it clear he is unhappy that the central bank has not moved again. If market sentiment from Wall Street and prediction market participants proves accurate, September could mark the start of a gentler Fed policy path, signaling the central bank’s willingness to make measured adjustments rather than sweeping changes.
Such a move may calm some of the political heat and soothe Wall Street, but it will also set the tone for how the central bank navigates the rest of the year’s economic challenges, such as dealing with tariffs. The data from both CME FedWatch and prediction markets now consistently points to one outcome: a small, well-telegraphed rate cut in September.