Following Federal Reserve Chair Jerome Powell's dovish remarks at the Jackson Hole symposium, markets are bracing for a potential rate cut in September. Aggregated data from CME's FedWatch tool, Polymarket, and Kalshi reveal that traders have placed tens of millions of dollars in bets on a 25-basis-point reduction, with the probability now surging to around 78%.
CME FedWatch: 75% Probability of 25bps Cut
According to the CME Group's FedWatch tool as of August 23, 2025, the market assigns a 75% probability that the Federal Reserve will cut the federal funds rate by 25 basis points at its September meeting, while the odds of holding rates steady stand at 25%. This represents a significant increase from previous weeks, reflecting a sharp shift in market sentiment after Powell's dovish tone.
Polymarket: 78% Bet on 25bps Cut, Year-End Odds at 93%
On the decentralized prediction market Polymarket, bets on a September rate cut are even more aggressive. The odds of a 25-basis-point reduction have climbed to 78%, a jump of 21 percentage points in recent sessions. The probability of any cut by September stands at 80%, while the likelihood of at least one cut sometime in 2025 has swelled to 93%. Meanwhile, only 3% of bets price in a larger 50-basis-point move, and less than 1% wager on a rate hike, effectively eliminating any tightening expectations. The probability of "no change" has tumbled to 20%, down 19 points. Millions of dollars are stacked behind the 25-basis-point option, while bets on a pause or a surprise hike are thinning quickly.
Kalshi: 77% Probability of 25bps Cut, $163 Million in Wagers
The regulated prediction market Kalshi tells a similar story. Traders are pricing a 77% chance the Fed trims rates by 25 basis points, an 18-point increase in recent activity. The probability of the central bank holding steady has slid to 21%, a 17-point drop. A thin 5% is priced in for something more aggressive than a quarter-point move, but conviction is squarely behind the smallest possible reduction. With over $163 million in wagers shaping these odds, Kalshi reflects strong agreement that the Fed will favor a cautious 25-basis-point cut over standing pat or attempting a bolder policy shift.
Three Markets Converge: September May Mark the Start of Fed Easing
In summary, CME futures, Polymarket, and Kalshi are aligned: September looks like the kickoff for Fed easing, with Powell's team expected to deliver a measured quarter-point cut rather than a dramatic swing. Tens of millions of dollars in wagers now await the final decision of the Fed's September meeting, with global financial markets holding their breath.