Scan: Will the Fed increase interest rates by 25 bps after the December 2026 meeting?

date	predicted	market price	confidence
2026-09-05	40%	44%	50%
2026-08-28	38%	48%	48%
2026-08-21	20%	28%	52%

1. Planner Fable 5.1 · Fermi decomposition + tool plan

Tools chosen: polymarket_direct kalshi_related polymarket_related fred article_search claude_news

Sub-questions (Fermi decomposition)

What is the current fed funds target range and what does the CME FedWatch / futures curve imply for the December 2026 meeting (probability of hike vs hold vs cut)?
What is the recent trajectory of core PCE and CPI inflation, and is it re-accelerating toward levels that would prompt FOMC members to discuss hikes?
What do recent FOMC statements, minutes, the latest Summary of Economic Projections dot plot, and Fed speakers say about the likelihood of rate increases in late 2026?
How are labor market indicators (unemployment rate, payrolls) evolving — is there any overheating that would justify tightening?
What do Kalshi's Fed decision markets and other Polymarket Fed markets price for the December 2026 meeting and preceding meetings (Sept/Oct/Nov 2026)?
Have there been any tariff/fiscal/oil shocks or Fed leadership changes in 2026 that shift the balance toward hawkish policy?

Planner reasoning

This is a Polymarket question about a 25 bp hike at the December 8-9, 2026 FOMC meeting. Hikes are rare given the current easing/hold environment; the key drivers are the futures-implied path, inflation trajectory, labor market conditions, and any hawkish Fed communications. I anchor on Polymarket's direct price, triangulate with Kalshi's Fed decision markets, and check macro data via FRED plus recent Fed commentary via news.

2. Research Parallel tool calls

tool	status	time	items	summary
polymarket_direct	OK	0.3s	1	## This Market's Polymarket Data Will the Fed increase interest rates by 25 bps after the December 2026 meeting? - Current price (probability): 60.50% - 7-day price change: +17.00% - 30-day price change: +35.00% - Total volume: $214,365 (USD notional) - Price range: 25.50% - 60.50% - Data point
kalshi_related	OK	2.6s	2	2 related markets / summaries. series KXFEDDECISION: 0 markets (skipped 60 no-signal) \| series KXFED: 0 markets (skipped 87 no-signal) \| keyword 'fed rate december 2026': ok \| keyword 'fed hike': ok
polymarket_related	OK	0.1s	2	Scanned 100 active Polymarket markets, kept 2 matches. keyword 'fed decision december': 0 markets \| keyword 'fed increase': 2 markets \| keyword 'fed rate hike 2026': 0 markets
fred	OK	4.1s	6	Fetched 6 FRED series (lookback=365d).
article_search	OK	46.6s	20	Fetched 20 unique articles across 3 queries (lookback=45d). 'FOMC December 2026 meeting rate hike expectations': 10 articles \| 'Fed officials rate increase inflation reaccelerating 2026': 10 articles \| 'CME FedWatch December 2026 probability': 10 articles
claude_news	OK	27.1s	14	## Key Findings - September 2026 meeting expectations (imminent, Sept 15-16): As of Sept 14, 2026, CME FedWatch showed an 84.1% probability that the US Federal Reserve will raise interest rates by 25 bps at the September meeting, marking what would be the first hike since 2023. Source: growbe

3. Evidence Brief Sonnet 5 · 6672 chars

# Event Will the Fed raise its target federal funds rate (upper bound) by 25 bps at/after the December 8-9, 2026 FOMC meeting, versus the level set prior to that meeting? # Outcomes to forecast - Yes (25 bps hike announced at Dec 2026 meeting) - No (no change resolution bracket; includes hold, cut, or no statement by deadline) # Kalshi market anchor No Kalshi-direct price was returned for this specific ticker in the research pull (only unrelated long-dated KXFEDFUNDSYEAR markets appeared under "kalshi_related," none tracking Dec 2026 hike probability directly). **Best available same-market proxy is Polymarket**, which prices this identical question (same ticker/question text) at **60.5% Yes**, up sharply from a 30-day low of 25.5% (+35pp in 30 days, +17pp in 7 days), on $214k volume across 48 data points. Treat this as the working consensus anchor in place of missing Kalshi data. # Sub-question answers 1. **Current range / futures curve for Dec 2026** — Fed funds upper bound is 3.75% (FRED DFEDTARU, unchanged since July 29 hold at 3.50-3.75%). CME FedWatch (via CNBC, Sept 10, 2026) showed ~70-84% odds of a Sept 16 hike and separately "nudged chances of another increase in December to close to 60%" as of Sept 10. 2. **Inflation trajectory** — Core PCE index rose from 126.954 (Sep-2025) to 130.658 (Jul-2026), an annualized pace near/above 3%; August core CPI rose 0.3% m/m (hotter than consensus), with headline CPI tracking ~3.4% y/y (Dow Jones estimate, CNBC). Inflation is described by Fed officials as "elevated" and re-accelerating, not cooling toward 2%. 3. **FOMC communications/dots** — July 29, 2026 statement held rates, citing inflation "remaining elevated." June 2026 dot plot implied one hike to ~3.8% by year-end, but new Chair Kevin Warsh (first meeting as chair) submitted no dot, signaling flexibility. Warsh's Aug 28 Jackson Hole speech was explicitly hawkish ("Fed's predominant focus right now should be on prices"). Waller and Williams are reportedly more cautious, wanting more data (claude_news). 4. **Labor market** — Unemployment fell to 4.1% (Aug 2026) from 4.4-4.5% (late 2025); payrolls grew modestly (~158.4M→159.1M, roughly ~65-70k/month over the trailing year, per FRED PAYEMS). No overheating signal; some reports note three straight weak NFP prints complicating the tightening case. 5. **Kalshi/Polymarket pricing for Sept/Oct/Nov/Dec meetings** — Polymarket: Sept 2026 25bps hike priced 88.5% Yes ($36M volume); Sept 2026 50bps hike priced 0.95% Yes ($25.9M volume) — market expects a single 25bp move in Sept, not larger. This Dec 2026 market (same question) is at 60.5% Yes and rising. No Kalshi-specific Dec 2026 hike market was found; related Kalshi markets track multi-year-out fed funds levels (2034-2036), not directly comparable. 6. **Shocks/leadership** — Oil crossed $100/bbl amid an ongoing Iran conflict (CNBC, Sept 10), adding inflationary pressure. New Fed Chair Kevin Warsh (installed mid-2026) is notably more hawkish than his predecessor and has been publicly pushing an inflation-first framing, a structural shift toward tightening bias. # Key facts (high-confidence, factual) 1. [FRED] Fed funds target range 3.50-3.75% as of Sept 2026; unchanged since July 29, 2026 hold. 2. [CNBC, Sept 10] CME FedWatch: ~70-84% probability of a Sept 16, 2026 hike; ~60% probability assigned to a further December hike (as of that date). 3. [claude_news/CNBC] Aug 28, 2026 Jackson Hole: Chair Warsh explicitly hawkish on inflation. 4. [FRED] Core PCE index up from 126.954 (Sep-2025) to 130.658 (Jul-2026); Aug core CPI +0.3% m/m. 5. [FRED] Unemployment 4.1% (Aug 2026), down from 4.4-4.5% late 2025; payrolls growing steadily, no labor overheating. 6. [Polymarket] This exact market trades 60.5% Yes, +35pp over 30 days; Sept 2026 25bps-hike sister market at 88.5% Yes. # Cross-market signals - Kalshi related: No direct Dec-2026 hike market found; only long-horizon (2034-36) fed funds level markets, not informative here. - Polymarket: Same-ticker market at 60.5% Yes (rising fast); Sept 2026 25bps-hike market at 88.5% Yes; 50bps-hike Sept market near 0% — consensus is single 25bp increments, not jumbo moves. - Sportsbook implied: N/A (not applicable to Fed policy). # Analyst opinions and speculation - LPL Financial's Jeffrey Roach: inflation pressures "becoming increasingly entrenched" amid Iran conflict/oil spike. - Navy Federal's Heather Long: Warsh's Jackson Hole remarks "opened the door" to a hike — "probably won't come in September, but it will by October or December," implying Dec is a live alternative window if Sept doesn't hike. - Goldman's Jan Hatzius (pre-CPI print) expected Fed to stay on hold in Sept with softer core prints — actual data came in hotter than his base case, reducing his framework's credibility somewhat. - CNN/Brookings: Warsh criticized for lacking a clear "reaction function," adding uncertainty to how data will translate into December decisions. # Directional lean per outcome - **Yes (hike in Dec):** Supported by hot and re-accelerating core inflation, hawkish new Chair Warsh, oil-driven cost-push shock, market pricing shifting decisively hawkish (Polymarket 25.5%→60.5% in 30 days), analyst commentary (Navy Federal) flagging Dec specifically as a hike window if Sept is skipped. - **No (hold/no change):** Supported by internal Fed dissent (Waller, Williams want more data), softening labor market prints (three weak NFP months noted), historical Fed reluctance to hike in consecutive meetings without overwhelming justification, and the likelihood that a Sept hike (if it occurs, ~84% priced) reduces urgency for an immediate follow-up in Dec absent a fresh inflation shock. # Gaps / unknowns - No Kalshi-direct price for this specific ticker was retrieved — the anchor used is Polymarket, a genuine gap versus stated methodology. - Outcome of the imminent Sept 15-16, 2026 meeting (not yet resolved in data) is the single biggest swing factor for December odds; not in the provided research. - No Oct/Nov 2026 meeting data or updated (Sept) dot plot was available. - Unclear whether any 25bps hike already occurred by data cutoff (Sept 14 pricing suggests decision pending imminently). # Calibration anchors - Polymarket YES price (proxy anchor): 60.5%, up from 25.5% a month ago — strong hawkish momentum but well short of near-certainty. - CME FedWatch-implied Dec hike odds (per CNBC, Sept 10): ~60%, roughly consistent with Polymarket proxy. - Historical precedent: consecutive-meeting hikes are common only during sustained hawkish cycles (e.g., 2022-23); a single-meeting-and-pause pattern is more typical absent continued data deterioration.

4. Forecasters Fable 5.1 + GPT-5.6 Sol · in parallel

claude-fable-5-1

44% conf

Yes	57%
No	43%

No Kalshi-direct price was available, so the same-ticker Polymarket market (60.5% Yes, up from 25.5% a month ago) and CME FedWatch (~60% for a December hike as of Sept 10) serve as the consensus anchor. The hawkish case is strong: core PCE running ~3%+ annualized, hot August core CPI, oil above $100 on the Iran conflict, and a new Chair Warsh explicitly prioritizing inflation. However, a ~88%-priced September hike would reduce the urgency of a consecutive December move, Waller and Williams want more data, payroll growth is soft, and the resolution requires exactly a 25bp increase at the December meeting itself, so I shade modestly below the anchor to reflect the historical rarity of back-to-back hikes outside a sustained tightening cycle.

gpt-5.6-sol

68% conf

Yes	61%
No	39%

The 60.5% Polymarket price and roughly 60% CME estimate provide the best available consensus anchor because no direct Kalshi price was retrieved. Inflation above target, hotter August core CPI, oil above $100, and Chair Warsh's inflation-first stance point toward a December hike. Conversely, weak payroll growth, cautious FOMC members, and the high probability of a September hike increase the chance that the Fed pauses in December. These counterweights justify staying close to the market anchor at 61% Yes.

5. Devil's Advocate Sonnet 5 · red-team critique

Both forecasters anchor tightly around the 60.5% Polymarket price without adequately stress-testing the "compounding conditional" nature of the event: December Yes requires BOTH a September hike (~84-88% priced) AND a further hike in December, yet the brief's Navy Federal quote suggests December is more likely framed as an "alternative" window if September is skipped, not a guaranteed follow-through — this conditional structure is underexplored and could push probability lower than the anchor suggests.

Neither forecaster addresses the critical unresolved gap flagged in the brief: "Outcome of the imminent Sept 15-16, 2026 meeting... is the single biggest swing factor for December odds; not in the provided research." Both should have explicitly scenario-split (Sept hikes → lower Dec odds due to reduced urgency; Sept holds → higher Dec odds as pressure builds) rather than treating the 60% Dec-specific proxy as already fully reflecting this branching uncertainty.

The historical base rate cited ("consecutive-meeting hikes are common only during sustained hawkish cycles") is invoked by Forecast 1 to shade down, but Forecast 2 ignores this reference-class argument entirely despite using nearly the same final probability — this is an inconsistency in reasoning quality despite convergent outputs, suggesting the anchor is doing most of the work rather than genuine analysis.

Both forecasts underweight Warsh's specific characterization as lacking a "clear reaction function" (CNN/Brookings) — this adds genuine bimodal/tail uncertainty (could go either far more hawkish or freeze due to internal FOMC conflict with Waller/Williams) that isn't well captured by a smooth ~60% point estimate; a wider confidence band or explicit mention of scenario variance would be more appropriate.

Forecast 2's confidence level (0.68) is notably higher than Forecast 1's (0.44) despite nearly identical probability outputs (0.61 vs 0.57) and citing the same evidence — this divergence in stated confidence is not justified by any additional analysis in Forecast 2's rationale, which actually raises the same countervailing points (weak payrolls, cautious FOMC members) as Forecast 1.

Neither forecaster flags the missing Kalshi-price gap as a material risk to calibration — since Polymarket's 60.5% may not perfectly reflect Kalshi-specific liquidity, participant base, or resolution-criteria nuances (e.g., Kalshi's stricter "no change" bucket including holds/cuts), treating it as a direct substitute without a haircut/adjustment is a methodological shortcut both forecasts share uncritically.

6. Aggregator Fable 5.1 · final calibrated forecast

58% (56% confidence)

Yes: 58% No: 42%

With no direct Kalshi price, the same-ticker Polymarket market (60.5% Yes) and CME FedWatch (~60% Dec hike odds) form a consistent consensus anchor that already reflects the September-meeting branching as a marginal probability, so the critique's 'compounding conditional' point is largely misplaced (a December hike does not require a September hike). The hawkish case is substantive: core PCE running ~3%+ annualized, a hot August core CPI, oil above $100 from the Iran conflict, and an explicitly inflation-first new Chair Warsh, with market pricing shifting +35pp in 30 days. Offsetting this are cautious FOMC members (Waller, Williams), soft payroll growth, the Fed's historical reluctance to hike at consecutive meetings outside a sustained cycle, and the fact that a September hike would reduce December urgency. I shade slightly below the anchor to reflect these headwinds and the proxy-market uncertainty, landing between the two forecasts at 58% Yes.

Pipeline Timing

Total pipeline time: 149.0s

Per-tool research timings shown in the Research section above.