Resolution criteria

The market resolves YES if the Federal Reserve cuts the federal funds rate at least 3 times (in 25-basis-point increments) before December 31, 2026. Resolution will be determined by official FOMC announcements and the Federal Reserve's policy decisions. Check the Federal Reserve's official website for rate decision announcements.

Background

The Fed left the federal funds rate unchanged at the 3.5%–3.75% target range in its January 2026 meeting, after three consecutive rate cuts in 2025. The Federal Reserve is widely expected to hold the federal funds rate steady within the 3.5%–3.75% target range for a second consecutive meeting in March 2026.

Forecasts for 2026 rate cuts vary significantly. Bankrate's 2026 Interest Rate Forecast projects three more cuts totaling 0.75 percentage point in 2026, while the Fed's median projection on the policy rate anticipates one more 25-basis-point cut in 2026. Economist Mark Zandi expects the central bank to enact three cuts of a quarter percentage point each before midyear, though this is more dovish than consensus expectations.

Considerations

Economists and market analysts have dramatically adjusted their forecasts in the last three weeks, with some now doubting the Fed will cut rates at all in 2026 due to geopolitical tensions affecting oil prices and inflation expectations. Fed officials are divided over the future path of interest rates, with some indicating further reductions would be appropriate if inflation continues to decline, while others argued it may be prudent to hold rates steady and some even raised the possibility that rate increases could become necessary if inflation remains persistently above target. President Trump nominated Kevin Warsh to become the next Fed chair, replacing Jerome Powell when the latter's term ends in May 2026, introducing additional uncertainty about the Fed's policy direction.