The Federal Reserve held interest rates steady today, keeping its benchmark target range at 4.25% to 4.50% for the second consecutive meeting. Citing “elevated uncertainty” and “moderating economic activity,” the FOMC reiterated its data-dependent approach and signaled no urgency to cut—but also little appetite to hike.
The decision was not unanimous. Two voting members—Michelle Bowman and Christopher Waller—broke ranks and voted to cut rates by 25 basis points, a striking shift for two of the Fed’s more hawkish voices. The dissent caught market participants off guard and sent event traders scrambling to reprice expectations for the Fed’s next move.
On Kalshi, the prediction market platform that allows users to trade on real-world outcomes, the effect was immediate. The “Fed maintains rate” contract for the September FOMC meeting jumped to 52¢, up from 25¢ just a week ago. That means traders now give a slightly better-than-even chance that the Fed will keep rates unchanged again in September.
The “Cut 25bps” market also surged, reaching 47¢—essentially pricing in a coin flip between a pause and a cut. Meanwhile, any talk of further hikes has evaporated. The “Hike 25bps” and “Hike >25bps” contracts are both trading at just 1¢, suggesting the market sees those outcomes as nearly impossible.
“The Waller dissent changed everything,” said one Kalshi trader in a public discussion. “He was the last person anyone expected to blink.”
Kalshi’s pricing reflects a broader shift in how traders are interpreting the Fed’s communication. Though the July statement reaffirmed the Fed’s commitment to its 2% inflation goal, it also emphasized caution. The Committee said it would “carefully assess incoming data, the evolving outlook, and the balance of risks,” and highlighted that “uncertainty about the economic outlook remains elevated.”
This tone, combined with the dual dissent, appears to have triggered a reevaluation among traders who had expected the Fed to stay firmly on hold through the fall—or even consider another hike.
Kalshi markets now show little interest in more aggressive action. The “Cut >25bps” contract is at 3¢, signaling that traders see only a slim chance the Fed would take a bigger step down. But the surge in pricing for both “Maintain” and “Cut 25bps” contracts suggests that the door is now wide open for a policy shift in September.
As of Tuesday afternoon, open interest across the rate decision markets exceeded $67,000, and daily volume topped $85,000. The volatility underscores just how closely market participants are watching the Fed—and how quickly sentiment can turn when the central bank shows even the slightest crack in its consensus.
Today’s pause might look like more of the same. But on Kalshi, the forecast is shifting: the Fed may not be done yet, but the pressure to act is clearly building.