Polymarket Says 2026 Rate Cuts Are Unlikely — Why Markets Are Pricing In Zero Moves

Polymarket is giving an 86% chance that the Fed delivers zero rate cuts in 2026.

At first glance, that sounds like a straightforward bet that rates stay where they are. But there is an important wrinkle in the market's structure: there is no separate bracket for a rate hike.

That means a Fed that holds rates steady all year and a Fed that hikes later this year both settle the same way.

Fed Rate Hike/Cut: Polymarket Odds

Here’s how the ladder currently looks:

More than $49 million has traded across the ladder, with roughly $7.4 million in the zero-cut contract alone.

At 86.4%, the market is essentially saying the Fed is very likely to finish the year at the current 3.50% to 3.75% target range.

But because hikes do not get their own outcome, that 86% is really closer to “no cuts” than “no policy change.”

Why that matters now

The distinction is especially important after the latest Fed minutes.

The July FOMC minutes released August 19 showed a more hawkish committee than the headline market might suggest. Many participants said further tightening could be necessary if inflation stopped improving, and some warned that waiting too long could force larger increases later.

Three officials had already dissented in favor of a quarter-point hike at the July meeting.

Despite that, the zero-cut contract only moved about one point, from roughly 85.5% to 86.4%.

The reason may be If traders think the Fed is more likely to hike, there is no clean way to express that view inside this market. The zero-cut contract is the closest thing available, even though “hold” and “hike” are very different economic outcomes.

The cut tail is actually getting more interesting

While zero cuts remain the overwhelming favorite, the smaller cut brackets have quietly moved higher.

One cut traded as low as 5.5¢ at the end of July and is now around 9.5¢. Two cuts moved from roughly 2.4¢ in late July to above 4¢ earlier this month.

That shift lines up with the recent inflation data.

July CPI rose just 0.1% on the month, while the annual inflation rate cooled to 3.4% from 3.5%. Core inflation also eased to 2.5% annually from 2.6%.

So within the span of about a week, traders got two conflicting signals: hawkish Fed minutes and another softer inflation print.

The market’s response has not been to abandon the zero-cut view. Instead, it has slowly put a little more probability into the one- and two-cut tails.

That makes sense. Traders do not need to believe cuts are likely to think 9.5¢ is worth owning. They only need to believe the probability is a little higher than the market suggests.

Zero cuts has already done most of its repricing

The zero-cut contract has spent much of the year moving higher on Fed meetings.

It jumped from about 70% to 80% after the June meeting, then moved from roughly 85% to nearly 89% around the July meeting. It peaked just under 90% at the end of July before drifting back into the mid-80s.

The biggest move actually happened earlier in the spring, when zero cuts went from around 40% in late April to nearly 58% within a week.

Since then, the market has mostly been grinding higher rather than making another major repricing.

That matters because at 86%, much of the “Fed stays put” story is already in the price.

There are still three scheduled meetings left this year: September, October and December. One cut only needs one of those meetings to turn dovish and the price could spike.

The trade

The safest-looking trade is still zero cuts Yes around 86¢. If the Fed simply does nothing for the rest of the year, the contract pays $1.

The problem is that you are risking 86 cents to make roughly 14 cents, and the market structure means you are also indirectly taking on hike risk without being paid separately for it.

The more interesting speculative trade is one cut Yes around 9.5¢.

You are paying less than 10 cents for the possibility that continued cooling in inflation, or a meaningful weakening in the labor market, pushes the Fed into one cut before year-end.

You do not need a full easing cycle. You only need one move.

That is why the one-cut contract may offer better asymmetry than zero cuts at current prices. The market is already heavily priced for no cuts, while the downside tail only needs one of the remaining meetings to break dovish.

The obvious risk is that inflation reaccelerates or the Fed actually hikes. A September hike would make the one-cut path much harder because it uses up one of the three remaining meetings and pushes policy in the opposite direction.

So the setup is fairly simple: zero cuts is the high-probability trade, while one cut is the cheaper high-upside bet on the data continuing to soften.

At 86%, I would not chase zero cuts much higher. The more interesting price on the board is the one-cut contract around 9.5¢.

Not financial advice.