Polymarket Predicts 96.3% Chance Fed Holds Rates at 4.25-4.5% in July Despite Trump Claims

The prediction market platform Polymarket has signaled a 96.3% probability that the Federal Reserve will maintain interest rates unchanged during its July 29–30 meeting, countering public claims by Donald Trump that rate cuts are imminent [1]. Despite Trump’s repeated assertions on social media that the current 4.25%–4.5% benchmark rate is stifling economic growth, market data and central bank signals suggest a cautious approach to monetary policy remains in place [2].

Trump has argued that lowering rates to 1% would save trillions in interest costs and boost the economy, accusing Fed Chair Jerome Powell of hindering housing markets and inflation control [3]. His statements have drawn pushback from Fed officials, including Governor Christopher Waller, who emphasized that inflation remains above the 2% target and that policy decisions must balance growth with price stability [4]. Polymarket’s projections align with this stance, reflecting investor expectations of a policy hold at the upcoming FOMC meeting and a terminal rate of 3.93% by year-end, according to CME futures [5].

U.S. stock and bond markets have shown minimal reaction to Trump’s rhetoric, with Polymarket’s odds and FedWatch tools reinforcing the likelihood of rate stability. Analysts note that market participants are prioritizing tangible economic data—such as inflation trends and employment statistics—over speculative political commentary. Historical trends suggest that surprise FOMC decisions could drive asset price volatility, particularly in crypto markets, but current predictions indicate little immediate change [6].

The Fed’s cautious trajectory reflects broader concerns about the risks of aggressive rate cuts. Deutsche Bank analysts highlighted that historically large rate reductions have often coincided with recessions, underscoring the need for measured adjustments [7]. Meanwhile, Polymarket users are wagering a 17% probability that Waller will succeed Powell by year-end, though this remains speculative [8].

Political tensions around the Fed’s independence have intensified, particularly after Trump’s visit to the central bank and his fluctuating public statements on replacing Powell. While the president initially threatened to remove the chair, he later softened his stance, stating, “I don’t want to be that Monday morning quarterback,” according to reports [9]. Critics warn that politicized interventions could undermine the Fed’s credibility, particularly as Trump’s 2024 campaign continues to spotlight economic issues.

Public sentiment further complicates the narrative. A CBS/YouGov poll found 64% of Americans disapprove of Trump’s handling of inflation, reflecting skepticism about his economic proposals [10]. Meanwhile, the Mortenson Construction Cost Index has surged 41% since 2019, indicating persistent inflationary pressures in sectors like housing.

Raoul Pal, CEO of Real Vision, noted that while Trump’s advocacy has influenced short-term market sentiment—seen in speculative asset rallies—crypto and traditional markets will ultimately respond more to forward guidance than immediate rate decisions [11]. As the Fed approaches its next meeting, investors remain divided between political calls for swift action and the central bank’s data-driven focus on long-term stability.

Source:

[1] [title: "Federal Reserve governor Christopher Waller banged the easy money drum"] [url: https://www.bloomberg.com]

[2] [title: "President Trump’s public statements on Fed rates"] [url: https://www.politico.com]

[3] [title: "Trump’s assertions on rate cuts and economic impact"] [url: https://coinmarketcap.com/community/articles/688607d731d9044a234223b3/]

[4] [title: "Deutsche Bank analysis on rate cuts and recessions"] [url: https://www.db.com]

[5] [title: "Polymarket’s prediction market data"] [url: https://coinmarketcap.com/community/articles/688607d731d9044a234223b3/]

[6] [title: "Market reaction to Trump’s claims"] [url: https://coinmarketcap.com/community/articles/688607d731d9044a234223b3/]

[7] [title: "Fed officials’ response to political pressure"] [url: https://www.bloomberg.com]

[8] [title: "Polymarket’s speculative odds on Fed leadership"] [url: https://coinmarketcap.com/community/articles/688607d731d9044a234223b3/]

[9] [title: "Trump’s visit to the Fed and statements"] [url: https://www.wsj.com]

[10] [title: "CBS/YouGov poll on inflation disapproval"] [url: https://www.yougov.com]

[11] [title: "Raoul Pal’s analysis on market dynamics"] [url: https://coinmarketcap.com/community/articles/688607d731d9044a234223b3/]