Markets Price 87% Probability of Fed’s 25bp September Rate Cut
Kalshi’s prediction market reflects strong anticipation of a 25 basis point rate cut, highlighting a near-certainty in financial markets about the Federal Reserve’s September decision.
Fact Check
The statement is strongly supported by the evidence. One source from August 5, 2025, explicitly cites the CME FedWatch tool, reporting a 90.4% probability for a September rate cut, which is very close to the 87% figure in the statement. Other articles from mid-to-late August corroborate this by describing markets as 'sure' and 'excessively confident' about a September cut, consistent with a high probability. While the exact percentage fluctuates, the evidence confirms that market-implied probability for a September cut was in the high 80s to low 90s during August.
Summary
Kalshi’s prediction market has recorded over $86.8 million in trading volume, with participants assigning a 92% probability to a 25 basis point rate cut by the Federal Reserve in its upcoming September meeting. This aligns with expectations from Goldman Sachs and JPMorgan, who anticipate a rate cut but caution that the Fed’s credibility could be at risk if market expectations are not met.
Terms & Concepts
- Basis Point (bp): A unit equal to 0.01%, commonly used in finance to describe changes in interest rates or yields.
- Rate Cut: A monetary policy action where a central bank lowers its benchmark interest rate to stimulate economic activity.
- Kalshi Odds: Market-based probabilities derived from prediction markets on Kalshi, reflecting participants’ expectations of future economic or policy outcomes.