Will Fed cut interest rate in December? Kalshi offers trading market for December financial decision

The record-long government shutdown is impacting the release of data needed to drive decisions on whether the Federal Reserve will cut the interest rate when it meets in December.

But that hasn’t stopped Wall Street from rallying around the potential for another reduction before the end of 2025.

The Fed is set to meet Dec. 9-10 and market watchers are predicting a repeat of October’s move when the rate was cut by .25 percentage points, lowering the target range to 3.75% to 4%. At the time of the cut, the Fed said the “committee will continue to monitor the implications of incoming information for the economic outlook.”

“The committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee’s goals,” the reserve said in a statement. “The committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

According to Bloomberg, the chances of a rate cut at Fed’s upcoming December meeting is about 70% with the likely cut of a quarter percentage point.

Over in the predictions market, roughly 85 percent of Kalshi users are trading on a rate cut occurring in December.

NOTE: Kalshi’s percentages are based on the information available when writing. Percentages are subject to change. Click here to view the active market for Fed Decision in December.

This helpful guide explains everything you need to know about Kalshi’s prediction markets.

The delay in the release of data complicates the issue. Key economic data, particularly related to the labor market, are a major factor in the decision to cut rates. Those figures are used to determine the rate banks charge each other for overnight loans and typically lead to a drop in other key rates, such as the prime rate used for consumer and business loans. The goal is to spur borrowing and spending on things like houses and cars, jumpstarting what’s proven to be a sluggish economy still beset by inflation.

The Bureau of Labor Statistics canceled its October inflation and jobs reports due to delays from the six-week shutdown. Its November job report, initially set to be released Dec. 5, has been moved to Dec. 16 and the inflation report was pushed back from Dec. 10 to Dec. 18. The delays mean the Fed will have to make an interest rate decision based on old data.

Data aside, experts are predicting a rate cut, something affirmed this week by Fed Governor Christopher Waller.

“My concern is mainly the labor market, in terms of our dual mandate. So I’m advocating for a rate cut at the next meeting,” Waller said Monday on the Fox Business Network. “You may see a more of a meeting-by-meeting approach once you get to January.”

How to predict if the Fed will cut interest rates in December using Kalshi

Kalshi has taken the world by storm and grown in popularity in recent years, but it’s easy to get confused about what it is. In short, Kalshi is a federally regulated financial prediction trading market.

Instead of offering betting lines, Kalshi offers “Yes” and “No” event contracts. Instead of profiting from users’ losses, it operates on a peer-to-peer trading system, collecting a 2% commission.

Like the stock market, these types of picks and predictions can experience drastic shifts, but the platform’s wide variety of markets makes it one of the most intriguing up-and-coming trading markets in the industry.