The Federal Reserve is expected to hold interest rates steady, with rate cuts unlikely despite leadership changes. The “Will no Fed rate cuts happen in 2026?” market trades at 43.1% YES, up from 33% a week ago.
The Iran-U.S. conflict is pushing oil prices up, which exerts inflationary pressure. This complicates the Fed’s ability to cut rates even as the labor market weakens. The market for no rate cuts in 2026 has strengthened accordingly, now at 43.1% YES.
Trading activity supports this view. The largest single move was a 12-point spike at 12:39 PM, from 36% to 48% YES. The market’s 24-hour volume is $130,975 face value, with $52,199 in actual USDC traded. It takes $13,903 to move the price 5 points, suggesting reasonable liquidity.
At 43¢, a YES share pays $1 if no cuts happen by 2026, a 2.32x return. For this bet to pay off, inflation pressures from energy prices and elsewhere would need to persist long enough to keep the Fed from cutting.
Watch for Fed Chair Powell’s next statement and any shifts in the FOMC’s dot plot. CPI reports and geopolitical developments affecting energy prices will be the main drivers.
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