Polymarket priced an October hold at 94.5 cents and Kalshi's quarter-point-hike contract traded at 6 cents early Monday. For December, both venues priced a rate increase above 75 cents, ahead of the swaps market.
The Federal Reserve's decision on Wednesday looks settled in prediction markets. The disagreement has moved six weeks further out.
On Polymarket, the contract on no change in rates after the October meeting was at 94.5 cents early Monday, after trading between 93.5 and 94.5 cents since Sunday afternoon. On Kalshi, the contract on a quarter-point increase last traded at 6 cents. Kalshi's contract on the Fed holding last traded at 90 cents on Sunday afternoon.
The Fed raised its target range to 3.75% to 4.00% in September, its first increase in three years. It is expected to pause this week.
Not the same bet
The gap between Polymarket's 94.5 cents and Kalshi's 90 looks like a disagreement about the Fed. Most of it is about structure. Polymarket's contract is a simple yes-or-no question on whether rates are unchanged. Kalshi lists a ladder of mutually exclusive outcomes, each priced separately, so spreads and the prices of unlikely rungs add up in a way they do not in a single binary contract.
Other markets point the same way. Fed funds futures implied about a 10% chance of an October increase, and overnight index swaps about 9.6% as of Friday's close.
A Sunday-evening burst
The quietest contract had a busy evening. Kalshi's hike contract traded about 261,000 contracts between Sunday afternoon and early Monday, and about 221,000 of them changed hands between 6 p.m. and 8 p.m. Eastern. The price rose from 6 cents to a high of 8 cents in the 7 p.m. hour, then returned to 6 cents.
That burst coincided with the weekly reopening of oil futures and with an unconfirmed report of a strike in Iran that coincided with a brief drop in Polymarket's ceasefire contracts. It cannot be attributed to either.
December is the real question
The bigger spread is in December. Polymarket priced a December rate increase at about 76.5 cents and Kalshi at about 79 cents, compared with about 72.8% implied by overnight index swaps as of Friday. Economists at ING expect the Fed to hold this week and raise rates by a quarter point in December.
That puts both prediction venues a few points more hawkish than the swaps market. The difference is modest, but it runs in the same direction on both platforms.
Two readings
One reading is that all of these markets say the same thing: a hold this week, a likely increase in December, and small gaps that reflect contract design and who is trading.
The other is that prediction-market traders are leaning further toward tightening than rates traders, perhaps because they weight the inflation risk from oil above $100 more heavily. If so, Wednesday's statement and press conference matter more for December than for October.
What to watch
Kalshi's October Fed market closes at 1:59 p.m. Eastern on Wednesday, a minute before the decision. After that, the statement, the press conference and how each venue reprices December.