Economists now predict just one Federal Reserve rate cut in 2026 due to rising inflation linked to the Iran conflict. The market for no Fed rate cuts this year is at 41% YES, up from 36% yesterday.
Market reaction
The expectation of limited rate cuts has moved related markets. The Fed Decisions from January to April market, which resolves YES if the Fed cuts rates, pauses, then pauses again, shows wide disagreement among traders. With only seven days left to resolve, positioning remains cautious given persistent inflation. The Federal Funds Rate at End of 2026 market, which projects the rate at 4.25% by year’s end, also shows increasing odds for a higher rate, consistent with revised inflation forecasts driven by geopolitical tensions and energy costs.
Why it matters
Trading volume on the no-cuts market hit $48,545 in USDC over the last 24 hours. Order book depth shows that $6,419 could move the odds by 5 percentage points, meaning a single large trade could shift the market. The largest recent move was a 5-point increase in a single day, a sign of strong trader conviction.
What to watch
The shift in economists’ outlook is a clear signal for traders. At 41¢, a YES share in the no-cuts market pays $1 if no cuts happen in 2026, a 2.44x return. That bet requires believing inflation won’t ease significantly this year. Watch for Powell’s statements and FOMC meeting minutes. Any hint of a dovish pivot or emphasis on inflation control will move these markets. The next FOMC meeting is in June.
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