Will the upper bound of the target federal funds rate be 3.5% at the end of 2026?
Prediction markets currently give a 35% probability that Will the upper bound of the target federal funds rate be 3.5% at the end of 2026?. This contract trades at 35¢ on Polymarket, closing December 9, 2026. The market is pricing a 36% probability that the Fed's upper bound stays at 3.5% through end-2026, but the 274.9% implied yield on the "Yes" side suggests significant mispricing or extreme tail risk hedging, especially given the modest $168.82 daily volume and $12.6M open interest.
Analysis
The market is pricing a 36% probability that the Fed's upper bound stays at 3.5% through end-2026, but the 274.9% implied yield on the "Yes" side suggests significant mispricing or extreme tail risk hedging, especially given the modest $168.82 daily volume and $12.6M open interest. The sharp 9-cent price rise over seven days combined with 779% realized volatility and a 4.20 vol ratio indicates heightened uncertainty around Fed policy trajectory, though the neutral regime score and low cliff risk index (2) suggest the market isn't pricing an imminent catalyst before the 236-day expiry.
Resolution rules
The FED rate is defined in this market by the upper bound of the target federal funds range. The decisions on the target federal fund range are made by the Federal Open Market Committee (FOMC) meetings. This market will resolve according to the upper bound of the Federal Reserve’s target federal funds range after the December 2026 Federal Open Market Committee (FOMC) meeting, currently scheduled for December 8-9, 2026. This market may resolve immediately after the statement for the FOMC’s December meeting, with relevant information about the FOMC’s decision on the target federal funds range, has been issued. If no FOMC decision on the target federal funds range for their December meeting has been issued by December 31, 2026, 11:59 PM ET, this market will resolve according to the upper bound of the target federal funds range at that time. The upper bound of the target federal funds range will be rounded to the nearest 25 basis points for resolution of this market. If the upper bound of the target federal funds range falls exactly between two listed options, it will be rounded away from zero (e.g. if the upper bound is 2.875, with listed options of 3.0 & 2.75, this market will resolve to 3.0). The primary resolution source for this market will be official information from the Federal Reserve (https://www.federalreserve.gov/monetarypolicy/openmarket.htm).
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Trade
sf trade 0xfdf784c55879c70a90eab563dde386b6c5965e41be15fa74424f1db623282312 yes 100