Will the Fed’s upper bound reach 5.5% or higher before 2027?

The market is pricing in only a 6% chance the Fed raises rates to 5.5% or higher before year-end 2026, despite the extreme 2689% implied yield on "Yes" positions reflecting the massive payout if rates do spike that high. The 7-day price collapse from 22¢ to 6¢ suggests recent FOMC communications or economic data have significantly reduced rate-hike expectations, though the 4¢ spread and modest $21.55 daily volume indicate thin liquidity that could amplify price swings if sentiment shifts. With 258 days to expiry and a realized volatility of 2144%, this market carries substantial tail-risk exposure for contrarian bettors betting on aggressive Fed tightening.

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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