Markets price in just 21% chance of Fed rate cut in 2026

The Federal Reserve has not touched interest rates since late 2025. Markets think that streak is going to continue for a while longer.

As of mid-2026, prediction markets are pricing in roughly a 76.5% probability that the Fed makes zero cuts this year, according to Kalshi. The implied odds of even a single 25 basis point cut sit at just 19.8%.

The federal funds target range has been parked at 3.5% to 3.75% since late 2025. The Federal Open Market Committee has held rates steady through multiple consecutive meetings, and the latest FOMC projections put the median rate at 3.8% by the end of 2026.

Why the Fed is in no rush

Consumer spending has remained resilient, feeding the inflation the Fed is trying to cool. The Consumer Price Index recorded a 4.2% year-on-year increase in May 2026, driven in part by energy costs pushed higher by ongoing geopolitical tensions in the Middle East.

Goldman Sachs now projects the first rate reductions will arrive in June and December of 2027, with a terminal rate landing somewhere between 3% and 3.25%.

On Polymarket and Kalshi, the probability of a hold at the July 2026 FOMC meeting is sitting above 85%. Futures markets are telling a similar story, with near-term cut probabilities in the low single digits.

What this means for crypto

Higher rates for longer is not a comfortable environment for risk assets, and crypto sits squarely in that category. When borrowing costs are elevated, capital tends to migrate toward assets that pay you to hold them, like bonds and money market funds, and liquidity tightens.

That said, institutional flows into crypto have held up with surprising durability. Bitcoin and Ethereum have continued attracting inflows despite the tighter monetary backdrop. Spot Bitcoin ETF products have played a meaningful role in making that possible, giving large allocators a cleaner on-ramp that did not exist during previous Fed tightening cycles.

The 21% cut probability that framed the market’s thinking earlier in 2026 has now been refined into something even more pessimistic for rate-cut bulls. Kalshi’s 19.8% single-cut estimate and Goldman’s 2027 forecast form a rough consensus: the Fed is done cutting for now, and the economy is too strong to justify a pivot.

What to watch heading into the second half of 2026: inflation data, particularly energy and services components; any softening in consumer spending that might give the Fed cover to shift its language; and FOMC meeting statements for any change in tone around the phrase “sufficiently restrictive.”

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