Will the Fed Raise Interest Rates in September? Prediction Market Forecast

Market Snapshot

• Hike 25bps: 53%
• Fed maintains rate: 46%
• Hike > 25bps: 1%
• Cut 25bps: <1%
• Cut > 25bps: <1%
• Volume: $24.69 million+
• FOMC meeting: Sept. 15-16, 2026
• Rate decision: Sept. 16 at 2 p.m. ET
• Current target range: 3.50%–3.75%
• Prediction market prices and volume as of 7:57 a.m. ET on Aug. 31, 2026.

Quick Brief

The Federal Reserve's September decision is shaping up as a close call.

Prediction markets give a 25-basis-point rate hike a 53% probability, narrowly ahead of the 46% chance that policymakers leave rates unchanged. Larger moves in either direction are barely registering, leaving traders focused almost entirely on a quarter-point increase or another hold.

The market has moved sharply in recent days. Expectations for a September hike jumped after Fed Chair Kevin Warsh's Jackson Hole remarks on Friday reinforced concerns that inflation remains too high and that monetary policy may need to tighten further.

More than $24.6 million has already traded on the September decision, with two weeks and several major economic reports still separating the market from the Fed's announcement.

The Big Picture

The Fed has held its target rate at 3.50%–3.75% since the beginning of 2026, but the case for another increase has been building.

At the July meeting, policymakers voted 9–3 to keep rates unchanged. Beth Hammack, Neel Kashkari, and Lorie Logan dissented, with all three preferring a 25-basis-point increase. The Fed's statement said economic activity continued to expand at a solid pace while inflation remained elevated relative to its 2% goal.

The latest inflation readings have done little to eliminate that concern. July's PCE price index was 3.7% higher than a year earlier, while core PCE, which excludes food and energy, increased 3.3%.

Warsh added to the pressure at Jackson Hole, signaling that the Fed may need to tighten further if inflation fails to move convincingly toward 2%. The reaction was immediate: expectations for a September hike rose substantially across interest-rate markets following the speech.

Reading the Market

Despite the shift toward a hike, prediction markets are hardly signaling certainty.

The 53% price on a quarter-point increase and 46% price on another hold leave the two primary outcomes separated by only seven percentage points. Meanwhile, a hike larger than 25 basis points is priced at just 1%, while either size of rate cut is below 1%.

That concentrates almost the entire market around one question: Does the Fed move rates 25 basis points higher in September, or wait?

The answer has changed repeatedly as economic data and Fed signals have arrived. The market's history shows the probability of a hike moving substantially over the past several months before returning above 50% heading into September.

With major employment and inflation reports still ahead, today's slight preference for a hike remains vulnerable to another repricing.

What to Watch

• August jobs report: The next Employment Situation report arrives Sept. 4. The Fed said in July that job gains had kept pace with workforce growth and unemployment had changed little; a meaningful surprise could alter the balance between inflation and labor-market concerns.
• August inflation: CPI arrives Sept. 11, just days before the FOMC meeting. With inflation still running above the Fed's target, another firm reading could strengthen the case for a hike, while softer data could give policymakers more room to wait.
• Fed commentary: Warsh's Jackson Hole remarks already moved rate expectations substantially. Additional signals from policymakers before the pre-meeting communications blackout could move the market again.
• The September projections: The Sept. 15-16 meeting includes a new Summary of Economic Projections, giving markets an updated look at policymakers' expectations for inflation, growth, unemployment, and the future path of interest rates.
• Hike vs. hold: Traders aren't pricing meaningful probability for a cut or an increase larger than 25 basis points. Unless that changes, the market is effectively a two-outcome race heading toward Sept. 16.

New to prediction markets? Read our guide to prediction markets for how prices work, what moves them, and what to know before trading.