Fed Rate Predictions 2027: Markets vs the Fed's Own Dots

Every page that answers fed rate predictions 2027 quotes the same number, 4.1%, and almost none of them say where it comes from or who disagrees with it. I read the strongest results on the query this morning: one is an econometric widget with no narrative, one is a dot-plot explainer that never mentions a traded market, one is a single bank's revision, and the highest-authority result still forecasts cuts to 2.25% because it has not been updated since before the Fed started hiking again.

The gap matters because 2027 is the first year in a while where the Fed's own projection and the market's price genuinely part company. On 2026 they sit two basis points apart. On 2027 the gap is 36 basis points, and the direction is the opposite of what most people assume: the market is priced higher than the Fed, not lower.

So this is the full reconciliation. I pulled the September Summary of Economic Projections from the Fed's own PDF, Kalshi's ladders for all eight 2027 meetings, Polymarket's fifteen-strike end-2027 market and its traded meeting markets, today's Treasury par yield curve, and one professional forecast at the top of the distribution. Then I turned five probabilities per meeting into a rate path, and checked how much of it is tradeable.

The short answer: the Fed says 4.1%, Kalshi says 4.46%, Polymarket's mid prices say 4.10% and its bid side says 4.25%, and the bond market sides with the exchanges. The longer answer is that only one of the eight 2027 meetings has a price worth reading.

Where the Fed Funds Rate Actually Sits Today

The target range is 3.75% to 4.00%, set on September 16, 2026, when the Committee raised it a quarter point on a 12 to 0 vote. That is 2026's only move so far. July 29 held at 3.50% to 3.75% on a 9 to 3 vote, so the September unanimity is itself a signal about how fast the hiking case hardened.

Two 2026 decisions remain, and neither is in much doubt. The October meeting runs today and tomorrow, October 27 to 28, and both venues price a hold at better than nine in ten. December 8 to 9 is where this year's second hike is priced, and it carries the Summary of Economic Projections that will revise the 2027 dots.

Those two meetings take the midpoint from 3.875% to about 4.08%, which is within three basis points of the Fed's own end-2026 median of 4.1%. The whole of this article's disagreement sits in the twelve months after that. Our December dot plot preview covers what the 2026 line does next; this one is about the year the committee has barely started arguing about in public.

What the Fed's Own Dots Say About 2027

Eighteen participants submitted projections in September 2026. Their median for the end of 2027 is 4.1%, which is exactly their median for the end of 2026. Read on its own, that is the whole forecast: hike once more this year, then do nothing for a year, then start easing, with 2028 at 3.9%, 2029 at 3.6% and the longer run at 3.2%.

What the median hides is how much wider the committee's disagreement gets the moment you cross into 2027. The range of individual 2027 dots runs from 3.1% to 4.4%, a 130 basis point spread, against just 50 basis points for 2026. The central tendency, which drops the three highest and three lowest dots, widens from 4.1% to 4.4% on 2026 out to 3.6% to 4.4% on 2027.

Two things follow from that table and neither is in the headline number. Because the central tendency's upper bound is 4.4% after trimming the three highest dots, at least four of the eighteen participants put the end of 2027 at 4.25% to 4.50%, a full two hikes above today. And because its lower bound is 3.6% after trimming the three lowest, at most three participants project anything below 3.50% to 3.75%, with one lone dot down at 3.1%.

The committee also raised its 2027 dot by 50 basis points in a single quarter, from 3.6% in June to 4.1% in September. A median that moves half a point in three months is not a forecast anybody should treat as an anchor, and the market does not treat it as one.

Why 4.1% Means 4.00% to 4.25%

A dot is not a rate. It is each participant's view of the midpoint of the appropriate target range, rounded to the nearest eighth of a percentage point, and the Fed moves that range in quarter-point steps. So the published medians land on a coarse grid, and reading them back into target ranges is the step most coverage skips.

This matters for comparing the Fed with Polymarket, because Polymarket's end-of-year market resolves on the upper bound of the range, not the midpoint. The Fed's 4.1% dot is Polymarket's 4.25% strike. Get that mapping wrong by one step and you will read the market as 25 basis points more hawkish than it is.

What Polymarket Prices for the End of 2027

Polymarket runs a fifteen-strike market on the upper bound of the target range after the December 7 to 8, 2027 meeting. It is the only direct, tradeable forecast of the 2027 destination I can find anywhere, and it has taken $27,279 of volume in its life, against $7.1 million on the equivalent end-2026 market. That is a 261 to one difference in interest between two markets twelve months apart.

The quoted prices cannot be read as probabilities as they stand. The fifteen mid prices sum to 160%, the bids sum to 82% and the asks to 238%, which is what a ladder looks like when nobody is arbitraging it. The 5.75% strike is quoted at 11.5% while the 5.5% strike below it is quoted at 1.35%, an impossible shape that comes entirely from a 21 cent spread. So the column worth reading is the bid side, normalised.

Normalised that way, the market's expected upper bound is 4.25%, which maps to a 4.125% midpoint, or a hair above the Fed's 4.1% dot. But the central estimate is the least interesting thing in the table. The useful number is the balance of weight: 51.7% of the normalised bid side sits above the Fed's 4.25% strike and 23.9% below it, a ratio of better than two to one. On the quoted mids the same split is 49.2% above and 36.1% below.

In other words, traders are not betting against the Fed's destination so much as against its confidence. They place the mode where the committee places its median, and then hang twice as much tail risk above it as below.

Kalshi's Meeting-by-Meeting 2027 Path

Kalshi takes the other approach: five outcomes per meeting, for every one of the eight 2027 FOMC dates, each resolving on that meeting's own decision. Chain them together and you get a rate path rather than a destination, which is a more demanding thing for a market to price and a more useful thing to read.

I normalised each meeting's five mid prices to sum to 100%, took the expected change in basis points, and compounded from today's 3.875% midpoint. Every 2027 date is in the table because the shape of the path is the story: the hiking is front-loaded into the first half, it stops by the summer, and the market starts pricing the first cut into next December.

The path lands at 4.46% at the end of 2027. Against the Fed's 4.1% median that is 36 basis points, or about one and a half more quarter-point hikes than the committee's own projection contains. Notice also that the market clears the Fed's 4.1% dot at the January 26 to 27 meeting, eleven months before the year it describes ends.

The March meeting is the one doing the work: a 59.9% chance of a hike, the highest of any 2027 date, and the first meeting of the year that carries a new Summary of Economic Projections. December 2027 is the only date where a cut outprices a hike, at 18.9% against 13.8%. Every date is in our 2027 FOMC meeting schedule with the release times.

Four Reads on End-2027, Side by Side

Here is the reconciliation, which as far as I can tell nobody else has published. Four independent estimates of the same quantity, converted to the same units, which means the midpoint of the target range after the December 2027 meeting.

Two readings of that table are both fair. The gentle one: every market estimate sits inside the Fed's own range of 3.1% to 4.4%, so nobody is forecasting something the committee has not already written down. The sharper one: three of the four market-based estimates sit above the Fed's median, and none sits below it. When a market disagrees with a central bank in only one direction, that is information.

Wells Fargo is the useful outlier. On September 30 it revised its end-2027 call from a 4.00-4.25% range all the way up to 4.75-5.00%, holding its 2027 inflation forecast at 3% and arguing that a firmer price path needs a firmer policy response. Polymarket's 5.0% strike, which is exactly that call, carries 9.8% of the normalised bid weight. The market has not dismissed the hawkish case; it has priced it at roughly one in ten.

What the Treasury Curve Says About the Same Year

Prediction markets on 2027 are thin. The Treasury market is not, and it prices the same question indirectly. A one-year bill yield is roughly the average overnight rate expected over the next year plus a term premium, so it is a sanity check on any rate path you build from exchange odds.

The one-year bill sits 24 basis points above the market-implied path and 41 above the path implied by the Fed's own dots. Twenty-four basis points of term premium on a one-year bill is ordinary. Forty-one is not. The bond market is not voting for Wells Fargo's 5%, but it is clearly not financing the Fed's flat 2027 either.

The long end tells a different story and it is worth not conflating the two. At 4.99% the ten-year is 179 basis points above the Fed's 3.2% longer-run dot, which is a statement about term premium and debt supply rather than about 2027 policy. Our ten-year yield forecast takes that apart separately.

Where 2027 Pricing Breaks Down

Everything above comes with a liquidity warning, and it is a large one. The 2027 markets exist, they are quoted, and almost none of them trade. If you are going to lean on a number from this article, lean on January's.

Four of the eight 2027 meetings traded zero contracts in the last day. Taken together the whole year moved 440 contracts, against 1,245,852 on the October 2026 meeting alone, a ratio of about 2,800 to one. Open interest is healthier than volume because positions were opened months ago and left alone, which is a different thing from a live price.

This is also why the January agreement is the strongest single data point here. Polymarket's traded ladder and Kalshi's traded ladder reach 4.164% and 4.165% after that meeting, from entirely separate order books. Agreement to a tenth of a basis point between two liquid markets is worth more than a point estimate from fifteen illiquid strikes.

What Would Move the 2027 Number

The 2027 projection gets four more official revisions before the year it describes begins, and the first one is six weeks away. December 9 is the date to watch, because it is the first time the committee restates its 2027 view since the September round that moved it 50 basis points.

Inflation is the first thing that could break the current pricing: the committee's own 2027 core PCE median is 2.5% and Wells Fargo is at 3%, and that gap is most of the difference between a 4.1% rate and a 4.9% one. Growth is the second, with the Fed projecting 2.4% real GDP in 2027 and unemployment flat at 4.1%, about as benign a backdrop as a hiking cycle gets.

The third is the projection itself. A Fed communications review is weighing whether to keep publishing a quarterly rate path at all, and Chair Warsh has declined to submit a dot at either meeting he has chaired. If the dots stop, the market prices in this article stop having an official number to disagree with, and every forecast on the query becomes a market forecast by default. Live probabilities for each meeting sit on our Fed decision odds page.