Fed Rate Monitor

The Federal Open Market Committee (FOMC), FOMC for short, is a policy setting body within the Federal Reserve System (the Fed). The FOMC makes key decisions about U.S. monetary policy, in particular it is tasked with setting the target range for the federal funds rate. The federal funds rate is the rate at which commercial banks lend each other money overnight to satisfy their reserve requirements, and thus has rippling effects on everything from consumer interest rates on loans and credit cards to savings account yields. The FOMC meetings are typically scheduled eight times a year, though additional unscheduled meetings are possible if conditions warrant them.

Before the FOMC meeting, the Fed staff will prepare extensive forecasts and materials pertaining to economic conditions including employment, inflation, GDP growth, financial markets, and credit conditions. During the meeting, committee members will review the staff briefings, discuss the current economic and financial conditions, evaluate potential risks to their dual mandate (maximum employment + price stability) and deliberate on the final policy decision. The policy decision will dictate the whether the target federal funds range will hike, cut, or hold. After the decision is reached, the FOMC generally issues a statement that summarizes the decision and their economic assessment. Additionally, four times a year the comittee publishes the Summary of Economic Projections (SEP) and holds a press conference with the Fed Chair. The Fed then implements the policy decision via tools such as open market operations, interest on reserves, and term operations to ensure that the effective federal funds rate moves toward the target.

Since the FOMC meeting signals changes in the federal funds rate, this in turn influences short-term interest rates, long-term rates, credit conditions, and bank lending. Markets react not only to the actual policy decision (cut/hike/hold), but also the accompanying language, tone, and forward guidance presented during the meeting minutes and statement. Changes or surprises in either of these often cause volatility in the markets. Different asset classes, such as bond yields, stocks and commodities may all move but often show varied responses. The market effect tends to be the largest at or around the anouncement and minutes release when new information is incorporated. With that being said, the FOMC meeting also affects expectations, and the markets expectation of the Fed decision will influence asset prices ahead of the meeting as well. Additionally, because of the Fed’s dual mandate on employment and inflation is quite broad, the market also interprets non-rate signals from the meeting. Even without a rate change, wording can cause movement in the markets.

The Fed Rate Monitor tool from Oddpool gives you an aggregate view of the market-implied probabilities for the upcoming FOMC meeting. Moreover, the Fed Rate Monitor provides a real-time view into differences in implied probability across interest-rate derivatives venues like CME and prediction markets such as Kalshi and Polymarket. CME probabilities are derived from institutional futures pricing, reflecting hedging and macro positioning by banks and funds, while prediction markets like Kalshi and Polymarket capture more direct, retail-driven sentiment about policy outcomes.

At a glance, our Fed monitor displays the current favored consensus for the upcoming FOMC meeting policy decision between all sources, as well as the largest difference in probability across markets. The Fed rate arbitrage scanner helps you spot profitable arbitrage opportunities for Fed Decision lines on Kalshi and Polymarket, computing the expected earnings per contract after taking into account the fee structure of both platforms. Using the Fed Rate Monitor can provide fascinating insights into how sentiment for the upcoming FOMC meeting differs across retail investors, institutional investors, and platforms alike.