Traders Price Zero Fed Rate Cuts in 2026 as New Fed Boss Kevin Warsh Inherits 3.8% Inflation

Markets price the Fed maintaining the 3.50% to 3.75% target range through 2026, ending earlier expectations for cuts. Traders on Kalshi and Polymarket have placed more than $42 million combined on no rate change at the June 17 meeting. The hawkish stance of the new Fed chair on inflation and the balance sheet keeps borrowing costs elevated. The Fed has held the target range at every 2026 meeting, citing uncertainty in inflation and employment data. The March dot plot showed a median projection for one cut by year-end, while dispersion increased and more officials projected no movement. April produced the highest dissent level since 1992, and short-term Treasury yields rose as rate-cut pricing was removed from the front end of the curve.

"Markets now price the Fed holding rates at 3.50%-3.75% through 2026, ending earlier bets on cuts. Kalshi and Polymarket traders have placed over $42M combined on no rate change at the June 17 Fed meeting. New Fed Chair Kevin Warsh's hawkish stance on inflation and balance sheet keeps borrowing costs elevated."

"The Fed's target range sits at 3.50% to 3.75% after three 25-basis-point cuts in late 2025. Since then, the central bank has held at every 2026 meeting, citing uncertainty across inflation and employment data. The March dot plot showed the median official still projected one cut by year-end, but dispersion widened, with more members penciling in no movement at all."

"The April meeting drew the highest level of dissent since 1992, according to some reports, pointing to a divided committee with a hawkish lean. Markets took notice. Short-term Treasury yields climbed as rate-cut pricing was removed from the front end of the curve. The two-year yield moved higher while the ten-year recently held near 4.3%, reflecting a higher-for-longer environment that is now the prevailing assumption across Wall Street."

"On Kalshi, the contract for the Fed maintaining its current rate at the June 17 meeting is trading at 96% probability, priced at 97 cents on the dollar for a Yes position. A 25-basis-point cut sits at just 3% and a hike at 2%. That contract has drawn $8,380,429 in total volume since opening in late September 2025 and is scheduled to close just before the official announcement."

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