Will the Fed’s upper bound reach 4.25% or higher before 2027?

This market is pricing in an extremely low probability (8%) for Fed rate increases to 4.25% or higher by end-2026, despite the current upper bound sitting around 5.33-5.50%, which suggests the market is heavily discounting further tightening or pricing in rate cuts instead. The astronomical implied yield of 1,627% on the Yes side combined with zero 24-hour volume and minimal open interest of $4,603 indicates severe illiquidity and potential mispricing, making this a high-risk speculation rather than a reliable probability estimate. The 822% realized volatility and 12-point cliff risk index suggest this market experiences extreme price swings, likely driven by sparse trading activity rather than fundamental information flow.

Resolution rules

The FED interest rates are defined in this market by the lower or 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 to “Yes” if the lower or the upper bound of the target federal funds rate reaches the specified level at any point by December 31, 2026, 12:59 PM ET. Otherwise, this market will resolve to “No.” Emergency rate cuts and hikes outside the regularly scheduled meetings will be considered. The resolution source for this market is the official website of the Federal Reserve at: https://www.federalreserve.gov/monetarypolicy/openmarket.htm. This market may resolve as soon as the relevant data showing the reached level is published.

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