With less than 24 hours to go before the Federal Reserve’s September policy decision, traders on Kalshi are nearly unanimous: the central bank is poised to deliver its first rate cut of 2025.
The Kalshi market on the September Fed decision shows a 93% chance of a 25 basis-point reduction. Odds of a larger half-point move sit at just 6%, and the probability of no cut has dwindled to 3%. That consensus mirrors CME FedWatch data, which pegs the same 25bp outcome at 96%.
The confidence reflects a balance of risks: sluggish hiring and consumer unease on one hand, and tariff-fueled price pressures on the other. As CBS News noted, the economy added only 29,000 jobs per month from June through August, far below last year’s pace. Inflation, meanwhile, ticked up to 2.9% in August, still above the Fed’s 2% target and shaped heavily by Trump administration tariffs on imported goods.
Beyond Wednesday, traders are split on how deep the Fed’s easing cycle will run. In Kalshi’s 2025 rate-cut path, odds favor exactly three cuts this year at 50%. That would imply a cut in both October and December following September’s move. Two cuts is at 35%, while four cuts lags at 9%.
That divergence underscores the central question of the moment: whether Powell and the FOMC are initiating a gradual adjustment or signaling a broader pivot. Barron’s notes that the September meeting is expected to be “the most consequential of the year,” with updated economic projections and Powell’s press conference set to provide guidance.
Meanwhile, politics continue to swirl around the Fed’s leadership. Kalshi’s market on whether Governor Lisa Cook will be removed this year has climbed to 23%, up more than ten points in recent days. That follows President Trump’s ongoing legal battle to oust her, despite a federal appeals court ruling this week that blocked immediate termination.
At the same time, Trump’s influence at the Fed grew this week with the Senate’s narrow 48–47 confirmation of Stephen Miran as a new governor. Sworn in Tuesday morning, Miran’s presence has sparked questions about the committee’s independence. The market on whether there will be a dissent at this week’s meeting has surged to 86%.
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Finally, Kalshi traders are trading on which themes Powell will emphasize during Wednesday’s press conference. The Powell keywords market shows a 78% chance he mentions “cuts” three or more times, 71% odds he references “goods inflation,” and 52% odds he utters the word “recession.” Mentions of “uncertainty” five or more times are priced at 63%.
That mix highlights the dual challenges Powell faces: communicating that the Fed is responsive to slowing growth while maintaining vigilance against tariff-driven price shocks.
The takeaway
Kalshi markets now forecast:
The odds suggest that while tomorrow’s cut is locked in, the longer-term path is clouded by politics, tariffs, and Powell’s careful calibration of Fed independence.
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