- Polymarket predicts 76% chance Fed keeps rates steady in May amid pressure.
- Market sees 21% chance of a modest 25 bps rate cut, but no major changes.
- Odds of a 50 bps cut or rate hike remain near zero, reflecting stability.
With the U.S. economy sending mixed signals, expectations surrounding the Federal Reserve’s next interest rate action seem set. According to crowd-sourced predictions from Polymarket, there’s a 76% chance the Fed will keep its benchmark rate unchanged at the May 7 meeting.
Among those pushing for an easing of monetary policy are President Donald Trump and investor Arthur Hayes, both arguing that lower rates could stimulate a slowing economy. However, the Fed appears committed to caution, prioritizing stability over reactionary moves.
What Prediction Markets Show: 76% Odds Fed Holds Rates Steady
The Polymarket data, drawn from over $20 million in traded volume, reveals a strong consensus among traders. Most believe the Federal Reserve will maintain current interest rate levels. The price for a “Yes” bet on no change currently trades at 76¢, reflecting strong market confidence in that scenario.
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Besides the dominant expectation of no movement, the next most likely scenario is a modest 25 basis point cut. This possibility carries a 21% chance, with traders buying “Yes” at 21¢ and “No” at 80¢. While not the front-runner, this outcome has attracted speculative interest, especially during moments of economic uncertainty.
Deeper Cuts Unlikely, Hike Even Less So
Significantly, the chance of a deeper cut 50 basis points or more remains extremely slim. It holds just a 4% probability, suggesting that market participants believe the Fed will avoid aggressive shifts.
Related: How a Potential Fed Shift to QE Could Impact Your Crypto Portfolio (Analysis)
Meanwhile, the odds of a rate hike are practically nonexistent. With a likelihood of less than 1%, the market is nearly unanimous in ruling out an increase.
Why Traders Remain Confident Fed Will Stand Pat Despite Noise
A closer look at trading patterns since January shows the “no change” scenario steadily dominating. This option has hovered near or above 80% at several points, indicating growing market confidence in the Fed’s steady-hand approach.
Meanwhile, the 25 basis point cut option has shown more volatility. It has experienced occasional spikes, likely in response to economic data releases or public statements.
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