Prediction Markets Pass the Fed Test—Now Comes the Hard Part
Prediction markets defended the correct FOMC outcome, generated more quarterly revenue for Robinhood than equities or crypto, and moved deeper into corporate hedging. The signal is working. The next test is whether the category can create durable financial behaviour
Citadel Securities broke from consensus on Monday, with head of macro strategy Frank Flight __projecting__the Fed would deliver a surprise quarter-point hike to cement Chair Kevin Warsh's inflation-fighting credibility.
Interest-rate swaps responded, with implied odds of a hike touching 40% ahead of Wednesday's decision, an unusually high level of pre-meeting uncertainty by recent standards. CME FedWatch ran slightly cooler, with the probability hovering in the mid-30s.
But prediction market traders never allowed the most dramatic scenario to become the base case.
Polymarket’s market maintained approximately a three-in-four probability that the Federal Reserve would leave rates unchanged. The crowd held its ground and the Federal Open Market Committee ultimately voted 9–3 to...
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