Most traders at Polymarket are betting on a cut in the federal funds rate as the Federal Open Market Committee (FOMC) meeting, scheduled for September 17-18, approaches. Data from the decentralized betting platform shows that 77% of traders expect a 25 basis point cut, reflecting a strong consensus on the outcome.
The betting site, which reached a trading volume of $10.9 million, also indicates a 21% chance of a more significant 50 basis point cut, while only 3% of traders believe the rate will remain unchanged.
Key economic indicators drive expectations for rate cuts
Expectations for rate cuts are being driven by several key economic indicators. Falling inflation and a weakening labor market are fueling expectations that the Federal Reserve may act to provide more economic support.
These factors are consistent with the Fed’s dual mandate to control inflation while promoting economic growth.
While most analysts agree on the likelihood of a 25 basis point cut, they also note that a more significant cut could be considered if economic conditions deteriorate further.
Recently, at a symposium in Jackson Hole, Federal Reserve Chairman Jerome Powell said that “the time has come” for the US Federal Reserve to cut interest rates. According to Investec economist Lottie Gosling, very weak data may increase the likelihood of a 50 basis point rate cut, while on the other hand, strong data may rule out a larger cut.
“While Powell declined to comment on whether the door to a 50 basis point [rate] cut in September could be open, we suspect that further marked deterioration in the labor market could prompt the FOMC to ease more aggressively,” – she commented.
In addition, analysts predict a drop in bitcoin price volatility as markets prepare for a potential cycle of rate cuts by the Federal Reserve.
Bloomberg will integrate Polymarket’s election rates with Terminal
Leading financial data and information services provider Bloomberg LP is reportedly set to integrate election odds data from cryptocurrency betting platform Polymarket into its widely used Terminal.
Polymarket, a blockchain-based predictive marketplace running on the Polygon network, has become a well-known platform for tracking real-time election odds. The platform allows users to bet on a wide range of event outcomes, using transparent blockchain data and smart contracts to execute trades and payouts.
According to Dune Analytics, Polymarket’s trading volume in August approached $450 million, with nearly $760 million bet on the outcome of the US presidential election.
Last month, five US senators and three representatives of the House of Representatives called for a ban on bookmaking activities related to the upcoming 2024 presidential election.
The bipartisan group includes prominent figures such as Senators Jeff Merkley, Richard Blumenthal, Elizabeth Warren and Representatives Jamie Raskin and John Sarbanes. The group has raised concerns about the possibility of billionaires using big bets to influence election results, which could undermine public confidence in the democratic process.
