Prediction Markets vs FedWatch: Can Polymarket Predict the Fed Better in 2026?

The Fed’s rate path has swung sharply since September 2026, leaving investors to compare whether prediction markets can track the Federal Reserve better than traditional interest-rate futures. After the FOMC raised the federal funds target range to 3.75%-4.00% on September 16, traders expected another October hike. That view reversed fast: by October 7, the CME FedWatch Tool put the probability of a further increase at 17.2%. Softer PCE inflation and disappointing employment data helped push down Kalshi’s October 25-basis-point hike odds from 65% (September 25) to 33% (September 30). The question now is which market signals turning points more reliably for assets like Bitcoin.