Polymarket Betting on Federal Reserve Rate Cuts

The decentralized prediction platform Polymarket has a nearly $1.44 million bet that the Federal Reserve will cut interest rates by September 2024.

This wager is part of various predictions as Polymarket users speculate on the Federal Reserve’s actions during the broader market downturn.

The $1.44 million bet indicates a 58% chance that the Federal Reserve will cut interest rates by over 50 basis points (bps). There is also a 40% chance of a 25 bps decrease. Notable individual bets include $687,343 on the first prediction and $313,224 on the second.

In regulated futures markets, as of publication, traders estimate an 83.5% probability that the Fed will cut by 50 bps in September, and a 16.5% chance for a 25 bps cut, according to CME’s FedWatch tool.

The prediction states, “This market will resolve to ‘Yes’ if, following the Federal Reserve’s September 2024 meeting, the upper bound of the target federal funds rate is decreased by 50 or more basis points below the level prior to the meeting.” Otherwise, it will resolve to ‘No.’

Additionally, there is another prediction regarding an emergency rate cut in 2024, with users estimating a 25% chance of this occurring, and placing a $58,675 bet.

The federal funds rate currently sits between 5.25% and 5.5%. Financial experts, including WisdomTree’s Senior Economist and the CEO of The deVere Group, suggest that the Federal Reserve should lower rates to avert a potential recession, as previously reported by The Block.

Polymarket’s Performance

Polymarket experienced an all-time high trading volume of $387.01 million in July, according to The Block’s Data Dashboard. Additionally, the platform saw a record 44,520 traders participating.

Predictions related to United States political events significantly contributed to Polymarket crossing $1 billion in cumulative volume in early August, as reported by The Block.