What will the Fed rate be at the end of 2026?

According to the latest prediction market data for the query “What will the Fed rate be at the end of 2026?”, traders have formed a strong consensus.

Currently, 3.75% is dominating the market with an overwhelming 40% chance of winning. 4.0% follows in second place at 35.9%, while 4.25% sits in third with 10.2%. The betting volume for this specific market has already reached $6.6M, reflecting intense industry interest.

To better assess where each potential outcome stands, the market can be segmented into three distinct trading tiers based on implied probability and contract pricing:

🥇 Tier 1: The Dominant Leader

• 3.75% (40%): Currently commanding the highest probability, 3.75% is heavily favored by the order book. Traders looking to back this outcome face a “Buy Yes” contract price of 40¢, signaling a high degree of market conviction. This contract alone has generated $522.9K in volume.

🥈 Tier 2: The Primary Challengers

• 4.0% (35.9%): Positioned as the most viable alternative, 4.0% maintains a 35.9% chance of resolving true. Its “Buy Yes” shares currently trade at 36¢.
• 4.25% (10.2%): Sitting in third place with a 10.2% probability, the market shows measured skepticism toward 4.25%, treating it as an outside wildcard unless momentum shifts.

🥉 Tier 3: The Long-Tail Options (Combining for ~14%)

Beyond the top three choices, a wide field of macro variables and long-shot outcomes are being tracked. While their individual probabilities hover low, they represent crucial hedges for speculative traders:

• Alternative Options: This includes 3.5% (8.2%), ≥ 4.5% (3.4%), and 3.0% (2.5%).
• Speculative Volume: Despite low statistical likelihood, certain long-tail contracts like 3.25% are still attracting notable interest.

The FED rate is defined in this market by the upper bound of the target federal funds range. The decisions on the target federal fund range are made by the Federal Open Market Committee (FOMC) meetings.

This market will resolve according to the upper bound of the Federal Reserve’s target federal funds range after the December 2026 Federal Open Market Committee (FOMC) meeting, currently scheduled for December 8-9, 2026.

This market may resolve immediately after the statement for the FOMC’s December meeting, with relevant information about the FOMC’s decision on the target federal funds range, has been issued. If no FOMC decision on the target federal funds range for their December meeting has been issued by December 31, 2026, 11:59 PM ET, this market will resolve according to the upper bound of the target federal funds range at that time.

The upper bound of the target federal funds range will be rounded to the nearest 25 basis points for resolution of this market. If the upper bound of the target federal funds range falls exactly between two listed options, it will be rounded away from zero (e.g. if the upper bound is 2.875, with listed options of 3.0 & 2.75, this market will resolve to 3.0).

The primary resolution source for this market will be official information from the Federal Reserve (https://www.federalreserve.gov/monetarypolicy/openmarket.htm).

While human consensus and speculative volume shape the broader prediction market, our quantitative algorithms offer a data-driven counter-perspective. By analyzing fundamental signals, underlying trends and historical distributions, our AI Valuation model calculates an independent “Fair Value” probability for each outcome.

Comparing this Fair Value against the current Trade Value uncovers major disparities — known as the Expected Value (EV) Gap. Contracts with a positive EV Gap represent statistically underpriced outcomes, whereas a negative EV Gap flags a potential market overreaction.

Top AI Alpha & Mispriced Arbitrage Opportunities

Based on the latest data model run, several key contracts stand out with significant deviations:

• The Most Overvalued Outcome 4.0% currently trades at 35.9%, but our AI places its Fair Value at just 11.6%. This creates a large negative EV Gap of -24.3%, suggesting the crowd may be overhyping this outcome and driving the premium too high.
• The Best Value Play (Highest EV) Our model identifies 3.0% as the premium value opportunity on the board. While the market only assigns it a 2.5% trading probability, our AI’s Fair Value assessment sits at 16.1% — yielding an impressive +13.7% EV Gap.
• Under-the-Radar Dark Horses Other notable discrepancies include 2.75% (EV Gap: +11.1%) and 3.25% (EV Gap: +8.9%). These long-tail opportunities are heavily discounted by the live order books despite stronger statistical backing from our predictive model.