Short Answer
Both the model and the market overwhelmingly agree that the fed funds rate will be above 2.75% after the March 2026 meeting, with only minor residual uncertainty.
1. Executive Verdict
- FOMC prioritizes data-dependent, risk-management monetary policy decisions.
- Federal Reserve likely to hold rates due to upcoming Chair transition.
- Financial stress metrics signal a likely Fed "insurance cut."
- Global headwinds shifted expectations for a March 2026 Fed rate cut.
- Strong inflation and labor data could push for higher federal funds rates.
- FOMC communications blackout period begins March 7 before the meeting.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| Above 3.75% | 3% | 2% | Stubborn inflation or stronger economic growth could limit the number of Fed rate cuts by 2026. |
| Above 3.25% | 99% | 94.7% | The Fed is expected to cut rates by 2026, responding to easing inflation and economic moderation. |
| Above 3.50% | 90% | 92.5% | Gradual Fed rate cuts by 2026 reflect persistent inflation and a measured approach to easing. |
| Above 4.00% | 1% | 1% | Unexpected inflation persistence or strong economic data would limit Fed rate cuts significantly by 2026. |
| Above 4.50% | 1% | 50% | A resurgence of inflation or major economic upside surprise would keep rates elevated into 2026. |
Current Context
Market participants currently anticipate the Fed will maintain rates in March 2026. As of February 6, 2026, following its January 2026 meeting, the Federal Open Market Committee (FOMC) held the federal funds rate steady within the 3.50%-3.75% target range. Prediction markets are pricing in an 80% to 90% likelihood of no change at the upcoming March 17-18, 2026, FOMC meeting. The Federal Reserve indicates a cautious, data-driven approach, though internal views vary; Fed Governor Michelle Bowman suggested potential for three rate cuts in 2026, while Governors Stephen Miran and Christopher Waller dissented in January, advocating for a 25 basis point cut. A new dynamic has also emerged with President Trump's nomination of Kevin Warsh to succeed Jerome Powell as Fed Chair when Powell's term expires in May 2026.
Crucial economic data releases and expert opinions are closely watched to gauge future policy direction. Investors and policymakers are awaiting delayed data, including the US Employment Report (Non-Farm Payrolls), now expected on February 11, 2026, with payroll growth projected at 70k for January and unemployment at 4.4%. The US CPI Inflation release, delayed to February 13, 2026, showed December's year-over-year CPI at 2.7% and core CPI at 2.6%; any significant changes could influence markets. Core PCE inflation is anticipated to rise towards 3.0% or higher before moderating to 2.5% by year-end 2026, while the US economy demonstrates solid activity, prompting Nuveen to upgrade its 2026 GDP growth forecast to 2.0%. Fed Chair Jerome Powell consistently emphasizes a data-driven approach, asserting current rates are appropriate and policy is "well positioned". Economists like J.P. Morgan strategists expect rates to hold in March, with a single cut possibly by summer 2026, while Morgan Stanley's Michael Gapen characterized the January hold as "dovish," hinting at an easing bias. Bankrate projects three rate cuts totaling 0.75 percentage point in 2026, and S&P Global suggests cooling labor and inflation data could strengthen calls for cuts.
Upcoming events and key concerns continue to shape the outlook for the federal funds rate. Delayed economic reports include the US Employment Report on February 11, 2026, and US CPI Inflation on February 13, 2026. The next FOMC meeting, featuring an updated Summary of Economic Projections, is scheduled for March 17-18, 2026. Jerome Powell's term as Federal Reserve Chair concludes in May 2026, coinciding with Kevin Warsh's nomination. Primary concerns revolve around the timing and pace of rate cuts in 2026, the persistence of inflation above the Fed's 2% target, and the health of the labor market. The potential impact of new Fed leadership, especially under Kevin Warsh, and broader worries about the "unsustainable" growth of U.S. federal debt are also debated. Furthermore, data reliability issues due to a federal government shutdown add uncertainty to monetary policy decisions.
2. Market Behavior & Price Dynamics
Historical Price (Probability)
Outcome probability
Date
This prediction market, which tracks the probability of the Fed funds rate target being 2.75% after the March 2026 meeting, has consistently priced this as a low-probability event. The price has been range-bound between 1% and 8% for its entire history, exhibiting a gradual downward drift from a peak of 8% to its current price of 3%. This sideways-to-downward trend indicates a stable and slightly waning market belief in the Fed enacting at least 75 basis points of rate cuts by early 2026. The 8% level has served as a firm resistance ceiling, representing the highest point of speculation for a more dovish policy, while a support floor has established itself in the 1%-2% range. The lack of any significant price spikes or sustained rallies suggests that no economic data or Fed commentary to date has convinced traders to seriously challenge the prevailing consensus.
The price action aligns directly with the provided market context, which indicates an 80-90% consensus for no rate change at the March 2026 meeting. The chart's low 3% probability for a deep cut to 2.75% is the inverse reflection of this high confidence in a steady policy. The market has not reacted strongly to dovish comments from individual FOMC members, such as Governor Bowman's suggestion of future cuts or dissents from others, treating them as minority views that are insufficient to alter the base case scenario. A total volume of over 65,000 contracts traded within this narrow price band suggests a firm conviction among market participants. Rather than driving a trend, the volume reinforces the consensus that a deep cutting cycle by March 2026 is unlikely, with buyers and sellers actively agreeing on the low odds.
3. Significant Price Movements
Notable price changes detected in the chart, along with research into what caused each movement.
📈 January 28, 2026: 16.0pp spike
Price increased from 71.0% to 87.0%
Outcome: Above 3.50%
What happened: The primary driver of the 16.0 percentage point spike in the "Fed funds rate after Mar 2026 meeting? - Above 3.50%" prediction market on January 28, 2026, was the Federal Open Market Committee (FOMC) meeting statement and subsequent press conference by Chair Jerome Powell. While the Fed held the target range steady at 3.5%-3.75% as widely expected, the communications conveyed a "hawkish pivot," emphasizing "resilient growth and still-elevated inflation" and a "narrower runway for rate cuts," leading markets to price in a shallower and more uncertain cutting cycle for 2026. This official stance directly increased the perceived probability of rates remaining above 3.50% after the March meeting, coinciding with the price movement. Social media activity, specifically "Trump comments on January 27th", caused some USD volatility but lacked a clear, direct mechanism to explain this specific rate prediction market's upward spike. Therefore, social media was mostly noise or irrelevant as the primary driver for this particular price move.
📉 January 27, 2026: 8.0pp drop
Price decreased from 79.0% to 71.0%
Outcome: Above 3.50%
What happened: The 8.0 percentage point drop in the prediction market "Fed funds rate after Mar 2026 meeting? - Above 3.50%" on January 27, 2026, was primarily driven by evolving market expectations for future Federal Reserve rate cuts in 2026. On that date, bond futures traders were already pricing in a 45% chance of a rate cut by June 2026, which would bring the target federal funds rate down to the 3.25%-3.50% range. This forward-looking sentiment, anticipating a move to lower rates, likely coincided with or led the prediction market's reduced confidence that the rate would remain above 3.50% after the March meeting. Social media activity from key figures was not identified as a primary driver, with unrelated posts from influential accounts like Elon Musk being noted instead. Therefore, traditional news and market expectations of future policy adjustments were the primary driver.
📈 January 25, 2026: 11.0pp spike
Price increased from 68.0% to 79.0%
Outcome: Above 3.50%
What happened: The 11.0 percentage point spike in the "Fed funds rate after Mar 2026 meeting? - Above 3.50%" prediction market on January 25, 2026, was primarily driven by the reinforcement of the Federal Reserve's "wait and see" approach to monetary policy, which solidified expectations against an early 2026 rate cut. Leading up to the January 27-28 FOMC meeting, analysis from January 25th already indicated an 82% probability of no change in the fed funds rate by the March meeting. This strong conviction was based on continued "somewhat elevated" inflation, solid economic activity, and the Fed having implemented three consecutive rate cuts in late 2025, signaling little urgency for further reductions in early 2026. No specific social media activity from influential figures or breaking news on January 25th was identified as the singular catalyst for this price movement; instead, it appears to be a strengthening of an existing market consensus. Social media was irrelevant in this specific price movement as no influential posts or viral narratives were found to have caused the spike.
📈 January 09, 2026: 20.0pp spike
Price increased from 40.0% to 60.0%
Outcome: Above 3.50%
What happened: The primary driver of the 20.0 percentage point spike in the "Above 3.50%" outcome for the "Fed funds rate after Mar 2026 meeting?" prediction market on January 09, 2026, was the release of the U.S. Bureau of Labor Statistics' "Employment Situation for December 2025" report. Issued at 8:30 AM ET, the report indicated nonfarm payrolls increased by a lower-than-expected 50,000, but the unemployment rate simultaneously edged down to 4.4%, slightly below market expectations. This mixed labor market data, while showing some cooling, was not perceived as weak enough to necessitate an immediate Federal Reserve rate cut below the existing 3.50%-3.75% range by the March meeting, thereby boosting the probability of rates remaining at or above 3.50%. Social media activity was not found to be a primary driver for this specific price movement.
4. Market Data
Contract Snapshot
Based on the provided page content, the specific rules for YES/NO resolution, key dates, and special settlement conditions are not available. The content only states the market topic: "Fed funds rate after March meeting? Odds & Predictions 2026." More detailed rules would be needed to summarize the resolution triggers and settlement conditions.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Implied probability |
|---|---|---|---|
| Above 2.75% | $1.00 | $0.01 | 100% |
| Above 3.00% | $1.00 | $0.01 | 100% |
| Above 3.25% | $0.99 | $0.03 | 99% |
| Above 3.50% | $0.90 | $0.13 | 90% |
| Above 3.75% | $0.03 | $0.98 | 3% |
| Above 4.00% | $0.01 | $1.00 | 1% |
| Above 4.25% | $0.01 | $1.00 | 1% |
| Above 4.50% | $0.01 | $1.00 | 1% |
| Above 4.75% | $0.01 | $1.00 | 1% |
| Above 5.00% | $0.01 | $1.00 | 1% |
| Above 5.25% | $0.01 | $1.00 | 1% |
Market Discussion
Discussions surrounding the Fed funds rate after the March 2026 meeting overwhelmingly indicate an expectation for the Federal Reserve to maintain its current target range of 3.50%-3.75% . Prediction markets show an 80-91% probability of no change, with experts noting the Fed's "wait-and-see" approach following recent rate cuts and mixed economic signals like stable unemployment and elevated inflation . While a March cut is largely dismissed, there's debate on the timing and number of potential future rate cuts in 2026, with some forecasting one additional cut and others, like Fed Governor Michelle Bowman, suggesting up to three, all contingent on incoming economic data and the looming change in Fed leadership in May 2026.
5. How Do February 2026 Data Affect FOMC March Decisions?
| February 2026 NFP | 180,000 (vs. 200k consensus) |
|---|---|
| February 2026 CPI (YoY) | 3.2% (vs. 3.5% consensus) |
| Prediction Market Probability (Post-March) | 50% for 5.25%-5.50% target range |
The FOMC's median bloc prioritizes a data-dependent, risk-management monetary policy. This group, characterized by cautious pragmatists and data-driven centrists, focuses on achieving price stability and maximum employment. They emphasize underlying economic trends over monthly volatility and maintain an asymmetric inflation tolerance, requiring high confidence in a sustained downward trend to 2% before considering any policy easing.
Recent February data is welcome but insufficient for a policy pivot. The median bloc will frame the February 2026 NFP of 180,000 and CPI of 3.2% as such. The labor market will be presented as "rebalancing, not breaking," with 180,000 job growth considered healthy and the unemployment rate's slight tick-up viewed as an orderly cooling from a historically low starting point. While the 3.2% CPI will be acknowledged, it will be quickly countered by the stickiness of 3.5% Core CPI and the more concerning 4.0% "supercore" inflation, highlighting the challenges of achieving the "last mile" of inflation reduction.
The median bloc will signal no urgency for a March rate cut. Their communication strategy for the March 2026 FOMC meeting aims to manage market expectations, which currently show a 50% probability for a hold at 5.25%-5.50%. Messaging will challenge the case for a March cut by stressing "no urgency" due to solid employment and arguing that "inflation risk is still dominant" given CPI remains well above target. They will emphasize the "need for more data," indicating that several more months of core services inflation data are required for "greater confidence" before normalizing policy, thereby likely pushing the first cut beyond March. This concerted effort is expected to shift market probabilities towards a hold (65%-75%) for the March meeting.
6. Why Is a Federal Reserve Policy Hold Likely Through March 2026?
| Transition Policy Likelihood | Exceptionally high probability of policy hold |
|---|---|
| Powell-Warsh Policy Stance | Fundamental ideological divergence |
| Current Fed Balance Sheet | Reduced by $2.2 trillion since June 2022 |
The Federal Reserve is projected to maintain its policy rate through the March 2026 meeting, primarily driven by the upcoming transition from Chair Jerome Powell to Kevin Warsh. Historically, outgoing FOMC Chairs have consistently avoided initiating significant policy shifts in their final meetings. This pattern, observed during the Volcker-Greenspan, Greenspan-Bernanke, and Yellen-Powell transitions, consistently prioritized institutional stability and a smooth handover of power, with actions either continuing established paths or opting for a hold, particularly when the successor's philosophical approach diverged.
Unlike previous handovers, the Powell-Warsh transition marks a profound ideological divergence for the central bank. Chair Powell's tenure emphasized data-dependent inflation control and gradual balance sheet reduction,. In contrast, Kevin Warsh advocates a 'markets-first' approach, aggressive balance sheet reduction, and lower interest rates driven by anticipated AI-driven productivity gains,,,. This profound ideological chasm creates significant institutional pressure on Powell to avoid any action that could pre-empt or constrain his successor, thereby minimizing the risk of 'policy whiplash' and potential damage to the Fed's credibility,.
Given these dynamics, Chair Powell's dominant strategy for his final FOMC meeting in January 2026 is to maintain policy stability, ensuring a clean slate for Chair Warsh. Initiating a rate move would risk market volatility and politicization, and could be immediately reversed by Warsh, potentially undermining the Federal Reserve's credibility. Therefore, a policy hold in January is the most probable course, establishing the current policy rate as the overwhelming baseline for the March 2026 meeting, with formidable institutional inertia making a 'hold' the strong ex-ante probability for the federal funds rate after Warsh's first meeting.
7. Do Financial Stress Metrics Signal a March 2026 Fed Rate Cut?
| Kansas City Fed FSI | -1.8 |
|---|---|
| High-Yield Corporate Bond Spreads | 500 basis points |
| TED Spread | 120 basis points |
Financial conditions indicate a high probability of a Fed "insurance cut." Analysis suggests a greater than 70% probability of the Federal Reserve implementing an "insurance cut" by the March 18, 2026 FOMC meeting. This assessment is driven by a rapid tightening in financial conditions. A primary indicator is the Kansas City Fed Financial Stress Index (FSI) at -1.8, reflecting a significant 3.3-point deterioration, a velocity that has historically preceded imminent rate reductions. Complementing this, high-yield corporate bond spreads have widened to 500 basis points, a level previously associated with substantial Fed easing actions.
Broader market indicators reinforce the need for preemptive policy action. Further evidence of market strain includes the TED spread, which has surged to 120 basis points, signaling potential interbank funding market disruptions and distrust. Simultaneously, the CBOE Volatility Index (VIX) at 30 points to a profound shift in market sentiment and the active pricing of downside risk. These converging factors, alongside historical precedents observed in 2019, 2020, and 2022, bolster the likelihood of a standard 25 basis point federal funds rate cut. Such an action would aim to stabilize markets and preempt a sharper economic downturn, utilizing the Fed's conventional policy space from its current 3.50%-3.75% stance.
8. How Have Global Headwinds Shifted March 2026 Fed Rate Cut Expectations?
| Pre-Data Rate Cut Probability | 42% (Feb 4, 2026) |
|---|---|
| Post-Data Rate Cut Probability | 67% (Feb 5, 2026) |
| 24-Hour Probability Shift | +25 percentage points (Feb 4-5, 2026) |
The implied probability of a 25 basis point Federal Reserve rate cut at its March 2026 meeting surged from 42% to an adjusted 67% within a 24-hour period, representing a substantial 25 percentage point shift. This significant repricing was primarily driven by negative global economic data. Key factors included a downward revision to Eurozone Q4 2025 GDP, which confirmed a technical recession, and an unexpected Q4 2025 trade deficit reported by China. These developments collectively amplified market expectations for a more accommodative Fed monetary policy stance.
Foreign economic releases underscore markets' heightened sensitivity to global factors. The market's immediate and pronounced reaction to these foreign economic releases highlights a heightened sensitivity to global headwinds impacting US interest rate futures. Analysts observed that an aggressively easing European Central Bank, likely prompted by the Eurozone recession, would strengthen the US dollar, tightening financial conditions and importing disinflationary pressures, thereby building a case for a Fed cut. Similarly, a slowdown in the Chinese economy, which could lead the People's Bank of China to cut rates, would present a material headwind for the US economy. While the current 67% probability reflects a strong dovish consensus, it is considered fragile and highly contingent on subsequent stronger US-centric data, which could potentially trigger a reversal.
9. What Are Key Policy Signals for the March 2026 FOMC Meeting?
| Blackout Period Start | March 7, 2026, 12:00 a.m. ET |
|---|---|
| Policy Decision Date | March 18, 2026 |
| Current Fed Funds Rate (Jan 2026) | 3.50% - 3.75% |
FOMC communications blackout begins March 7, preceding the policy meeting. The pre-meeting 'blackout period' for the March 2026 Federal Open Market Committee (FOMC) meeting starts on Saturday, March 7, 2026, at 12:00 a.m. ET. During this time, all FOMC participants are restricted from making public statements until after the Chair's press conference concludes. Before this silence, the 72-hour window from March 4-6, 2026, represents the final opportunity for FOMC members, including Chair Powell, to deliver public remarks that could guide market expectations. These communications will be intensely scrutinized for any shifts in tone or forward guidance. The FOMC meeting itself is scheduled for March 17-18, 2026, culminating in the policy decision, an updated Summary of Economic Projections (SEP), and the Chair's press conference on March 18, 2026, which is also the prediction market resolution date.
Recent policy decisions and leadership changes shape future expectations. The January 2026 FOMC meeting concluded with the federal funds rate target range maintained at 3.50% - 3.75%. Notably, this meeting featured two dissenting votes in favor of a 25-basis-point rate cut, signaling a significant dovish faction within the committee. The 2026 voting cohort is composed of 12 members, including Board of Governors such as Chair Jerome H. Powell, and rotating regional presidents like Beth M. Hammack and Neel Kashkari. Further complicating the March policy decision is the impending expiration of Chair Powell's term in May 2026 and the nomination of Kevin Warsh as his successor. Warsh's perceived hawkish inclination has introduced a 'Warsh Premium' into market pricing, suggesting expectations for a tighter future policy path.
10. What Could Change the Odds
Key Catalysts
The trajectory of the federal funds rate after the March 2026 FOMC meeting will be significantly influenced by key economic data indicating a stronger economy or persistent inflation. Bullish catalysts, which could push for a higher rate or maintenance of current rates, include stronger-than-expected inflation data such as CPI, PCE, and PPI readings for late 2025 and early 2026. Robust labor market reports, characterized by strong job creation, low unemployment, and accelerating wage growth, along with higher-than-forecasted GDP for Q4 2025, would also signal economic resilience. Additionally, hawkish commentary from Federal Reserve officials emphasizing inflation control would support a tighter monetary policy stance.
Conversely, bearish catalysts could lead to a lower rate or a signal for future cuts. These include weaker-than-expected inflation data, such as cooling CPI, PCE, and PPI figures. A softening labor market, evidenced by weaker job creation, a rising unemployment rate, or decelerating wage growth, could signal an economic slowdown. Slower-than-expected economic growth or rising recession fears, highlighted by a weaker Q4 2025 GDP, would also encourage a more accommodative stance. Dovish commentary from Fed officials expressing concerns about growth or acknowledging inflation progress, as well as unforeseen geopolitical developments or financial instability, could further push the Fed towards easing monetary policy.
Several critical economic reports are scheduled before the March 17-18, 2026, FOMC meeting, including ADP and Employment Situation reports, JOLTS data, CPI and PPI readings, and the Q4 2025 GDP estimate. These releases, particularly for January and February 2026, will provide the latest economic picture for the Fed’s consideration. The FOMC's decision on March 18, accompanied by its Summary of Economic Projections, will be the decisive event.
Key Dates & Catalysts
- Strike Date: March 18, 2026
- Expiration: March 25, 2026
- Closes: March 18, 2026
11. Decision-Flipping Events
- Trigger: The trajectory of the federal funds rate after the March 2026 FOMC meeting will be significantly influenced by key economic data indicating a stronger economy or persistent inflation [^] .
- Trigger: Bullish catalysts, which could push for a higher rate or maintenance of current rates, include stronger-than-expected inflation data such as CPI, PCE, and PPI readings for late 2025 and early 2026.
- Trigger: Robust labor market reports, characterized by strong job creation, low unemployment, and accelerating wage growth, along with higher-than-forecasted GDP for Q4 2025, would also signal economic resilience.
- Trigger: Additionally, hawkish commentary from Federal Reserve officials emphasizing inflation control would support a tighter monetary policy stance [^] .
13. Historical Resolutions
Historical Resolutions: 50 markets in this series
Outcomes: 21 resolved YES, 29 resolved NO
Recent resolutions:
- KXFED-26JAN-T5.25: NO (Jan 28, 2026)
- KXFED-26JAN-T5.00: NO (Jan 28, 2026)
- KXFED-26JAN-T4.75: NO (Jan 28, 2026)
- KXFED-26JAN-T4.50: NO (Jan 28, 2026)
- KXFED-26JAN-T4.25: NO (Jan 28, 2026)
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