Kalshi Traders Assign 29% Odds of No Fed Rate Cuts in 2024

Kalshi, a U.S.-regulated prediction market, has revealed that traders are now assigning a 29% probability that the U.S. Federal Reserve will not implement any rate cuts in 2024. This figure marks a sharp departure from earlier market expectations, which had largely anticipated multiple rate reductions. The prediction reflects a growing skepticism among informed market participants about the central bank’s near-term willingness to ease monetary policy, primarily due to persistent inflation concerns [1].

The shift in sentiment is driven by the performance of core Personal Consumption Expenditures (PCE) inflation, the Fed’s preferred inflation metric. Recent data indicates that core PCE remains stubbornly elevated, even as headline inflation shows signs of moderation. Nick Timiraos of the Wall Street Journal noted that core PCE inflation appears no better—and in some respects worse—than when the Fed first began considering rate cuts last year [1]. This suggests that the central bank may continue to prioritize price stability over growth in the short term, even if it means delaying rate reductions.

The implications of a “higher for longer” interest rate environment are broad, particularly for asset classes like cryptocurrencies, which are sensitive to changes in liquidity and risk appetite. Higher borrowing costs can reduce capital available for speculative investments, increase the opportunity cost of holding high-volatility assets, and dampen investor sentiment. Moreover, tighter monetary policy can lead to reduced liquidity and increased volatility in crypto markets [1].

Investors are increasingly adjusting their strategies to account for this uncertainty. Diversification across asset classes and market capitalizations, dollar-cost averaging, and a focus on long-term fundamentals are becoming more prevalent. Additionally, stablecoins and DeFi yield opportunities are gaining attention as potential havens in a high-interest-rate environment [1].

The Federal Reserve’s dual mandate—maximum employment and price stability—complicates its policy path. With core inflation still above the 2% target and the labor market remaining strong, the central bank is likely to maintain a cautious stance. This means that while the Fed may not raise rates further, it is also unlikely to cut them soon. The result is a prolonged period of elevated rates that could reshape investment strategies across traditional and digital asset markets [1].

For now, market participants must remain vigilant, as economic conditions and Fed communication will continue to influence expectations. The Kalshi prediction serves as a reminder that market consensus is not static and that macroeconomic fundamentals—particularly inflation—play a decisive role in shaping central bank policy [1].

Source: [1] Fed Rate Cuts: Kalshi Traders See Unsettling 29% Odds of No Cuts This Year https://coinmarketcap.com/community/articles/688b77e2680c444f8ca7e943/