December Fed decision odds and whether a quarter-point hike is value

74.5¢. That was Polymarket's price for a 25-basis-point increase at the December 2026 Federal Reserve meeting in the Gamma snapshot at 08:23 UTC on October 10, 2026. No change sat at 22.5¢ on the same print, a larger hike at 2.95¢, and the two cut brackets together under 2¢.

The quarter-point hike at 74.5¢ implies 74.5 per cent before the overround, against a two-venue average of 72.5 per cent: a 2.0 percentage point rich price, not an edge. Kalshi's normalised mid is 71.7 per cent. The division, and the levels that would flip it, follow.

How the 72.5 per cent figure is built

The estimate is an average of two prices for the same December question. Both contracts ask what the Federal Open Market Committee (FOMC) does at that meeting, not where the funds rate sits after the meetings in between.

On Polymarket the five outcome prices at 08:23 UTC were 74.5¢, 22.5¢, 2.95¢, 1.2¢ and 0.45¢. Those sum to 101.6¢. Dividing the hike by that sum gives 74.5 / 101.6 = 0.733, or 73.3 per cent. The same division puts no change at 22.5 / 101.6 = 22.1 per cent. The 1.6 cents above 100¢ are the overround, the amount that keeps the raw prices from reading as probabilities.

Kalshi quotes a bid and an ask, so the comparison uses the mid. The quarter-point hike was 73¢ bid and 74¢ ask, a 73.5¢ mid. No change, labelled "Fed maintains rate", was 24¢ bid and 25¢ ask, a 24.5¢ mid. The other three mids were 2.5¢, 1.5¢ and 0.5¢.

The five Kalshi mids sum to 102.5¢. Then 73.5 / 102.5 = 0.717, or 71.7 per cent, and 24.5 / 102.5 = 23.9 per cent. The average of the two hike shares is (73.3 + 71.7) / 2 = 72.5 per cent. The average of the two no-change shares is (22.1 + 23.9) / 2 = 23.0 per cent. Subtracting the Polymarket price gives the edge: 72.5 − 74.5 = −2.0 percentage points on the hike, and 23.0 − 22.5 = +0.5 points on no change.

Two figures stay out on purpose. Christopher Waller, on October 8, cited futures at an 85 per cent chance of at least one hike by the December meeting. That path covers both remaining meetings, so it stays out of this average. The September dots are a headcount, not a probability. The window is the morning of October 10, 2026, and no fee is converted into cents.

What 74.5 cents buys on December 9

The contract is Polymarket's Fed Decision in December? It resolves to the change in the upper bound of the target federal funds range versus the level in place just before the December meeting. The rules name the FOMC statement for the meeting scheduled for December 8-9, 2026, on the official calendar. A move that is not a multiple of 25 basis points rounds up to the nearest 25. If no statement is out by the end of the next scheduled meeting, the rules send the event to "No change".

After the September 16 vote the upper bound is 4 per cent, on a range of 3.75 to 4 per cent, passed 12-0. The rules measure the change from the level just prior to December. If the October 27-28 meeting has already raised the range, a hold in December resolves as no change even though the rate would be higher than it is now. That October contract is a different bet, and it is the subject of yesterday's note.

Cumulative volume was about $2.95 million, liquidity about $688,000, and the prior 24 hours about $9,820. The quarter-point outcome had about $763,000 of that volume. On Kalshi, the five outcomes had traded about 929,800 contracts, about 209,300 of them on the quarter-point hike. The favourite's spread is 74¢ bid and 75¢ ask.

Sources: Polymarket Gamma API, updated 08:23 UTC on October 10, 2026, and the Kalshi trade API read the same morning for event KXFEDDECISION-26DEC. Polymarket share = mid ÷ 101.6. Kalshi share = mid ÷ 102.5. Average = the mean of those two shares. Gap = average minus the Polymarket mid, which already reads as a per cent. Tail rows are rounded to one decimal.

Is a quarter-point hike at 74.5¢ value on the December Fed contract? On the October 10, 2026 snapshot, it is not. Polymarket's mid of 74.5¢ reads as 74.5 per cent before any adjustment. The five brackets sum to 101.6¢, so the hike's share is 74.5 divided by 101.6, which is 73.3 per cent. Kalshi's mid on the same meeting move is 73.5¢. Those five mids sum to 102.5¢, and 73.5 divided by 102.5 is 71.7 per cent. The average of 73.3 and 71.7 is 72.5 per cent. That sits 2.0 percentage points under the 74.5¢ price and 2.5 points under the 75¢ ask. A gap that size matches the one-cent spread and the overround. It does not clear a threshold worth treating as value. No change at 22.5¢ against a 23.0 per cent average is half a point the other way, inside the 22¢ bid and the 23¢ ask. Either side, lifted at the offer, spends the spread and keeps a remainder smaller than one cent.

Why a quarter-point hike is the base case

The minutes of the September 15-16 meeting, released on October 7, say most participants assessed that another increase would likely be appropriate by year end. They would still approach each meeting with an open mind. "Likely" is not a date. It remains the clearest official line on the two meetings left.

Waller put numbers on the dots on October 8. Sixteen of the 18 participants anticipated at least one more hike across the two remaining meetings. Four of those 16 expected two. Sixteen divided by 18 is about 89 per cent of the dots, not an 89 per cent chance of a December move. The headcount is too blunt to carry a meeting-specific price.

"The plain fact is that inflation is too high and has been for too long."

Kevin Warsh, Chairman, Federal Reserve (FOMC press conference transcript, September 16, 2026)

At that press conference he put total personal consumption expenditures (PCE) inflation at around 3.6 per cent in August, core PCE near 3.2 per cent and the Consumer Price Index (CPI) near 2.4 per cent, on the data then in hand. John C. Williams, on September 29, put inflation at 3.7 per cent and said one further increase late this year might fit his forecast. Our July note treated a hike as live but not dominant. September then delivered one, 12-0, and the price can still be no better than fair.

Why 74.5 cents can still be rich

Books this close have already done most of the work. Polymarket at 73.3 per cent and Kalshi at 71.7 per cent differ by 1.6 points. The 2.0-point gap versus 74.5¢ is mostly the overround. September shows a Committee that thought one more hike was likely and refused to name the meeting.

Payrolls since the meeting lean the other way, gently. On October 2 the Bureau of Labor Statistics reported nonfarm payroll employment up 29,000 in September, after an average monthly gain of 45,000 over the prior 12 months. Unemployment was 4.2 per cent, a tenth above the 4.1 per cent of July and August in the same release. The minutes, written before that print, had called the labour market close to maximum employment. A soft number does not rewrite that judgement.

"With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information."

John C. Williams, President and Chief Executive Officer, Federal Reserve Bank of New York (Unwavering Dedication, September 29, 2026)

Williams said that on September 29, before the payroll print, and he still allowed one further increase late in the year. Waller, on October 8, kept the hike case and said the moves need not come at consecutive meetings. That is a December hike with a pass in between, which is what 74.5¢ already charges. It is not a reason to pay above both books.

Is the quarter-point December hike value at 74.5¢ once the labour-market print is included? Still no. The September minutes, and 16 of 18 dots, are why the probability belongs in the seventies rather than the forties. Payrolls up 29,000, with unemployment at 4.2 per cent, are why it does not belong in the mid-eighties. Kalshi at 71.7 per cent and Polymarket at 73.3 per cent, both normalised, already sit in that band. A buyer at 74.5¢, or at the 75¢ ask, pays the favourite's price for a path Waller has called flexible and Williams has called unhurried. No change at 22.5¢ is not a bargain either. Its edge against the 23.0 per cent average is half a point, smaller than the step from 22¢ bid to 23¢ ask. Fair, within the cost of trading, is the landing. The earlier version of this question is the September no-change note.

Where this bet breaks

That lean, 74.5¢ slightly rich and not value, rests on the two books staying near 72 per cent and on December still being the meeting for a single further hike. It breaks if any of these is observable.

• The hike trades at 68¢ or lower while Kalshi stays above 70 per cent. Against an unchanged 72.5 per cent average, 68¢ would be about 4.5 points cheap, larger than the spread. Above 80¢ on both venues together, this morning's 72.5 per cent anchor is stale.
• The October 28 statement raises the target range. The minutes' "another increase by year end" would already have been delivered. December would become a second hike, which only four of 18 September dots expected. The contract would still be a meeting move, but the base case behind 74.5¢ would no longer match those dots.
• The November 6 employment report shows unemployment at 4.4 per cent or higher, or payrolls fall. That release is scheduled for 8:30 a.m. Eastern. A labour market the minutes called close to maximum employment would be back in the argument, and 72.5 per cent would be too high until the books moved.
• September CPI on October 14, or October CPI on November 10, prints a 12-month rate well clear of the 3.7 per cent Williams cited. Both are due at 8:30 a.m. Eastern. A sharp step down cuts the case for a further hike. A move up through the rate Warsh and Williams called too high would make 74.5¢ fair or cheap.

What to watch before the statement

September CPI on October 14 at 8:30 a.m. Eastern can move a 74.5¢ price. The FOMC meets on October 27-28, which resets the level December is measured against. October employment is November 6 and October CPI is November 10, both at 8:30 a.m. Eastern. November CPI on December 10 comes the day after the vote, so it cannot inform the statement.

December is a projections meeting. The statement is set for 2:00 p.m. Eastern on December 9, with the press conference at 2:30 p.m., on the Federal Reserve's December calendar. This contract resolves on the rate decision, not on the dots released with it. Kalshi closes at 1:59 p.m. Eastern. Polymarket can resolve once the statement is out. In December, 2:00 p.m. Eastern Standard Time is 19:00 UTC.

"If the economic data continue to come in as expected, I anticipate additional hikes to support a timelier return of inflation to our 2 percent goal. But there is some flexibility about when those hikes will occur."

Christopher Waller, Governor, Federal Reserve (speech, October 8, 2026)

Line levels worth marking are 68¢ and 80¢. Between them, the October 10 average of 72.5 per cent still has the hike as the base case without a collectable gap. Whether 2026 contains a cut at all was the subject of an earlier Kalshi and Polymarket note, and it is not this bracket.

FAQ

The open question is whether the October 14 price index and the November 6 jobs report leave December as the meeting that delivers the single further hike most participants sketched in September, or whether those prints pull 74.5¢ towards the no-change bracket before the statement at 2:00 p.m. Eastern on December 9.

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This article is informational analysis only and is not betting or financial advice. Odds and prediction-market prices move constantly; every price quoted is a timestamped snapshot, not a live line. There is no such thing as a guaranteed bet — past results and model estimates do not guarantee outcomes. Do your own research.

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