$1.96K
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$1.96K
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18
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On Mar 17, 2027 If the upper bound of the target federal funds rate published on the Federal Reserve's official website is greater than X following the Federal Reserve's Mar 17, 2027 meeting, then the market resolves to Yes. This market will expire the first 2:05 PM ET following the release of a Federal Reserve statement for their Mar 17, 2027 meeting or one week following the last day of that meeting.
Prediction markets are pricing in near certainty that the Federal Reserve will maintain a restrictive monetary policy stance through early 2027. The leading contract on Kalshi, asking if the upper bound of the federal funds rate will be above 1.00% following the March 2027 meeting, is trading at 98 cents, implying a 98% probability. This price indicates the market views a rate above this threshold as virtually assured, with minimal perceived risk of a deep cut back to near-zero levels within the next three years.
Two primary factors are anchoring these elevated odds. First, the market is pricing in a structural shift away from the ultra-low rate environment that defined the 2010s and the pandemic response. The current Fed policy rate, with an upper bound of 5.50% as of early 2024, reflects a prolonged battle against inflation. Markets now anticipate that the neutral rate of interest (R-star) is higher than pre-pandemic estimates, meaning the Fed can and will hold rates at more restrictive levels for longer without severely damaging the economy. Second, the Fed's own "higher for longer" signaling, reinforced in its 2024 dot plot projections which show a median policy rate well above 1.00% through 2026, provides a clear forward guidance anchor that the market is heavily discounting into 2027.
While the consensus is strong, the 2% implied probability for a sub-1.00% rate represents a tail-risk hedge. A severe, unforeseen economic contraction before 2027 could force the Fed into rapid, deep easing, similar to its 2008 or 2020 reactions. The odds could shift meaningfully if leading economic indicators, such as unemployment claims or PMI data, begin to signal a sharp downturn. Additionally, a sustained return of inflation to the Fed's 2% target earlier than expected, coupled with a labor market slowdown, might allow for a more aggressive cutting cycle than currently projected. The market will closely monitor each quarterly Fed Summary of Economic Projections (SEP) for changes in the long-run dot plot, with the March 2025 SEP being a key intermediate data point.
AI-generated analysis based on market data. Not financial advice.
This prediction market focuses on whether the upper bound of the federal funds rate target will exceed a specified level following the Federal Reserve's monetary policy meeting scheduled for March 17, 2027. The federal funds rate is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight on an uncollateralized basis. It serves as the primary tool for implementing U.S. monetary policy and influences broader economic conditions including inflation, employment, and economic growth. The Federal Open Market Committee sets this rate target range during its eight scheduled meetings per year, with the March 2027 meeting representing a key decision point approximately three years into the future. Market participants are attempting to forecast the direction of monetary policy well beyond typical economic forecasting horizons, which typically extend only 12-18 months. This long-term prediction requires consideration of multiple economic cycles, potential structural changes in the economy, and the evolution of the Federal Reserve's policy framework. Interest in this distant forecast reflects both the importance of interest rates to financial markets and the challenge of predicting monetary policy in an uncertain economic environment. The resolution will be determined by the official rate published on the Federal Reserve's website following the conclusion of the March 2027 meeting, with the market expiring shortly after the release of the FOMC statement.
The federal funds rate has experienced dramatic shifts throughout Federal Reserve history, providing context for the March 2027 forecast. Following the 2008 financial crisis, the Fed maintained near-zero interest rates for seven years from December 2008 to December 2015, an unprecedented period of accommodative policy. The subsequent hiking cycle saw rates rise to 2.25-2.50% by December 2018, only to be reversed in 2019 as growth concerns emerged. The COVID-19 pandemic prompted an emergency cut back to 0-0.25% in March 2020, where rates remained until March 2022. The post-pandemic inflation surge beginning in 2021 triggered the most aggressive tightening cycle since the 1980s, with the Fed raising rates 11 times between March 2022 and July 2023, bringing the target range to 5.25-5.50%. Historically, the Fed has maintained higher average interest rates during periods of high inflation, such as the early 1980s when Paul Volcker raised the federal funds rate to nearly 20% to combat double-digit inflation. The period from 2009 to 2021 represented an exceptional era of ultra-low rates that may not be repeated. Understanding these historical patterns helps frame whether March 2027 might see a return to pre-pandemic normalcy or establish a new equilibrium of higher structural rates.
The federal funds rate directly influences borrowing costs throughout the economy, affecting everything from mortgage rates and business investment to government debt servicing and consumer spending. A higher rate in March 2027 would signal persistent inflation concerns or a structurally changed economy requiring tighter monetary conditions, potentially slowing economic growth and increasing unemployment. Conversely, a lower rate would suggest the Fed has successfully returned inflation to target without causing significant economic damage. The rate level in 2027 will have profound implications for federal budget deficits, as higher interest rates increase debt service costs that already exceeded $800 billion annually in 2023. Financial markets are particularly sensitive to interest rate expectations, with bond prices inversely related to yields and equity valuations influenced by discount rates. For households, the rate affects adjustable-rate mortgages, credit card interest, auto loans, and savings account yields. The March 2027 decision will reflect the Fed's assessment of whether the post-pandemic inflation episode was transitory or indicative of lasting changes in the economic landscape.
As of December 2023, the Federal Reserve has paused its rate hiking cycle after 11 consecutive increases, maintaining the federal funds rate target range at 5.25-5.50%. The Fed's December 2023 projections indicated potential rate cuts in 2024, with the median participant forecasting three quarter-point reductions. However, Chair Powell has emphasized that policy will remain data-dependent, with particular focus on inflation progress toward the 2% target. Market participants are currently debating whether the Fed will achieve a 'soft landing' that allows inflation to return to target without causing a recession. The most recent FOMC statement from December 13, 2023, noted that inflation 'has eased over the past year but remains elevated,' indicating ongoing concerns about price stability. Economic projections released simultaneously showed committee members expect the federal funds rate to decline to 4.6% by the end of 2024 and 3.6% by the end of 2025, providing a baseline for extrapolation to March 2027.
The federal funds rate is the interest rate at which banks lend reserve balances to other banks overnight. It serves as the foundation for most other interest rates in the economy, influencing borrowing costs for consumers and businesses, affecting investment decisions, consumption patterns, and overall economic growth.
The Federal Open Market Committee meets eight times per year to set monetary policy, but does not necessarily change rates at every meeting. During active tightening or easing cycles, the Fed may change rates at consecutive meetings, while during stable periods, it may leave rates unchanged for multiple meetings.
The Fed's dual mandate requires it to consider maximum employment and price stability. Key factors include inflation data (particularly PCE inflation), unemployment rates, wage growth, economic growth indicators, financial market conditions, and global economic developments.
The federal funds rate applies to interbank lending in the open market, while the discount rate is the interest rate the Fed charges commercial banks for emergency loans directly from the Federal Reserve. The discount rate is typically set higher than the federal funds rate as a penalty for using the Fed's lending facility.
Educational content is AI-generated and sourced from Wikipedia. It should not be considered financial advice.
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18 markets tracked
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| Market | Platform | Price |
|---|---|---|
Will the upper bound of the federal funds rate be above 1.00% following the Fed's Mar 17, 2027 meeting? | Kalshi | 98% |
Will the upper bound of the federal funds rate be above 0.75% following the Fed's Mar 17, 2027 meeting? | Kalshi | 98% |
Will the upper bound of the federal funds rate be above 0.50% following the Fed's Mar 17, 2027 meeting? | Kalshi | 98% |
Will the upper bound of the federal funds rate be above 0.25% following the Fed's Mar 17, 2027 meeting? | Kalshi | 98% |
Will the upper bound of the federal funds rate be above 0.00% following the Fed's Mar 17, 2027 meeting? | Kalshi | 98% |
Will the upper bound of the federal funds rate be above 1.25% following the Fed's Mar 17, 2027 meeting? | Kalshi | 97% |
Will the upper bound of the federal funds rate be above 1.50% following the Fed's Mar 17, 2027 meeting? | Kalshi | 96% |
Will the upper bound of the federal funds rate be above 1.75% following the Fed's Mar 17, 2027 meeting? | Kalshi | 92% |
Will the upper bound of the federal funds rate be above 2.00% following the Fed's Mar 17, 2027 meeting? | Kalshi | 87% |
Will the upper bound of the federal funds rate be above 2.25% following the Fed's Mar 17, 2027 meeting? | Kalshi | 80% |
Will the upper bound of the federal funds rate be above 2.50% following the Fed's Mar 17, 2027 meeting? | Kalshi | 71% |
Will the upper bound of the federal funds rate be above 2.75% following the Fed's Mar 17, 2027 meeting? | Kalshi | 60% |
Will the upper bound of the federal funds rate be above 3.00% following the Fed's Mar 17, 2027 meeting? | Kalshi | 47% |
Will the upper bound of the federal funds rate be above 3.25% following the Fed's Mar 17, 2027 meeting? | Kalshi | 33% |
Will the upper bound of the federal funds rate be above 3.50% following the Fed's Mar 17, 2027 meeting? | Kalshi | 20% |
Will the upper bound of the federal funds rate be above 3.75% following the Fed's Mar 17, 2027 meeting? | Kalshi | 11% |
Will the upper bound of the federal funds rate be above 4.00% following the Fed's Mar 17, 2027 meeting? | Kalshi | 7% |
Will the upper bound of the federal funds rate be above 4.25% following the Fed's Mar 17, 2027 meeting? | Kalshi | 4% |
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