Polymarket Bets Put 54% Chance of 2026 Fed Rate Hike

Polymarket traders placed 54% odds that the Federal Reserve will raise its target rate in 2026 following Kevin Warsh’s debut as Fed chair at the ECB’s Forum on Central Banking in Sintra on July 1. The Polymarket contract that resolves if the Fed raises rates in 2026 has recorded more than $3.2 million in volume since launch. On Kalshi, markets priced a 77% chance of at least one hike before 2028, a 66% chance before July 2027 and a 53% chance before the end of 2027, with more than $3.1 million traded on those contracts.

Warsh appeared on a panel with European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Canada Governor Tiff Macklem. He noted that inflation expectations and risks had eased during his first four weeks as chair but warned that prices remain too high and reaffirmed the Fed’s 2% inflation target. He added that anyone expecting the Fed to tolerate inflation above 2% “would be disappointed.”

Recent data show consumer prices rose 4.2% year over year in May 2026, the largest annual gain since April 2023. Core CPI increased 2.9%, and core personal consumption expenditures, the Fed’s preferred gauge, climbed 3.4%. Energy costs were a major driver after disruptions to oil markets linked to the U.S.-Iran conflict. A preliminary cease-fire and the reopening of the Strait of Hormuz have since eased oil prices and pushed 10-year inflation breakeven rates toward about 2.2%.

At the Federal Open Market Committee meeting on June 17–18, officials kept the target range at 3.50% to 3.75%, shortened the policy statement and removed language that had signaled a preference for future rate cuts. The vote was unanimous, and the updated dot plot showed several officials expecting a hike later in the year.

Markets reacted to Warsh’s tone and the inflation readings. The 10-year Treasury yield moved toward 4.48%. Gold recovered some losses, and bitcoin rose toward $60,000, gaining roughly 2% to 3% on the day. Crypto ETF flows were broadly negative on June 30, with multiple major funds reporting outflows. Warsh addressed political pressure, stating the Fed remains independent, and declined to preview the outcome of the next FOMC meeting, expected around July 29. The next major inflation print, June CPI, is due July 14 and will be a key input for policymakers and markets.