Will the Fed Cut Rates in December 2026? Just 0.4%

Search will the Fed cut rates in December and you get a tracker widget with no date on it, or a page still quoting a September snapshot where a cut was 7%. Neither tells you the thing that actually matters four weeks out: a December cut is priced at 0.35%, and the live disagreement among traders is whether the Fed raises by a quarter point or a half point on December 9.

That is a very different article from the one most of these pages are writing. If you came here hoping for cheaper mortgage quotes in January, the honest answer is that both exchanges put a cut of any size somewhere between 0.6% and 1.0%, and the October CPI print that landed this morning pushed it down rather than up.

So here is what I did instead of quoting a tracker. I pulled every open contract on the December meeting from Polymarket Gamma and the Kalshi public API inside the same minute, read both settlement rules so the numbers mean the same thing, measured today's repricing hour by hour from Polymarket's own CLOB price history, and checked all of it against the Bureau of Labor Statistics release and the Fed's September projections.

The short version: the cut is not a live outcome at this meeting, the hike is, and the interesting number on the board today is a 50bp tail that was half a percent at breakfast and is near 10% tonight.

Will the Fed Cut Rates in December 2026? The Direct Answer

The FOMC meets on December 8 and 9, 2026, with the statement at 2:00 p.m. ET on the Wednesday. Both venues run a five-outcome ladder on that decision, and both ladders put the two cut legs at the bottom. Every quote below came out of the same minute.

Two things are worth noticing before you read any single number off that table. First, these are not thin books. Polymarket has traded $24.8m across the event and holds $2.24m of resting liquidity, and every Kalshi leg has traded in the hundreds of thousands of contracts, with over a million of open interest on the three hike-or-hold legs. These are prices, not quotes.

Second, the two venues agree to within a point on every outcome, which is unusual and useful. The widest gap is 0.95 points on no change. When two exchanges with different settlement sources, different user bases and different currencies land this close, the number is doing real work rather than reflecting one venue's idiosyncrasy.

October's CPI Repriced the Size of the Hike, Not the Direction

The October Consumer Price Index landed at 8:30 a.m. ET this morning, 13:30 UTC, and it ran hot. The BLS reported that the all-items index rose 0.4% on the month after 0.6% in September, and that the index less food and energy rose 0.3%. Both were above consensus.

Most coverage of that print said it raised the odds of a December hike. Measured against the venue's own hourly history, that is only half right, and the less interesting half. Here is the whole day on Polymarket's December ladder.

Look at the hour that contains the release. The 50bp bucket roughly tripled, from 4.35% to 12.75%, while the 25bp bucket fell two points. The no-change leg halved. That is not the market becoming more sure the Fed will move. It is the market becoming more sure the Fed will move *harder*, and taking the probability out of the quarter-point bucket to pay for it.

There is a second move on that table that I cannot pin to a catalyst, and I would rather say so than guess. Between 08:00 and 10:00 UTC, hours before the release, no change went from 19.5% to 6.5% and the 50bp leg went from 0.55% to 4.15%. That is a European-session repricing with no US data behind it, and anyone telling you exactly why is reverse-engineering a story from a chart.

One more wrinkle from the release itself, and it matters for anyone comparing this print to last year's. The BLS published no 12-month change for October at all, because it did not collect survey data for October 2025 during a lapse in appropriations. So any page quoting an October year-over-year CPI figure has either computed it from a gap or borrowed September's. I use three-month annualised rates below for exactly this reason.

The Fed's Own Dot Plot Already Pencilled In December

The strongest argument against a December cut is not a market price at all. It is the committee's own arithmetic, published in September and not revised since. The September 2026 Summary of Economic Projections put the median federal funds rate at the end of 2026 at 4.1%.

Run that against where policy actually sits. The target range is 3.75% to 4.00%, a midpoint of 3.875%, after the committee raised it by a quarter point in September. A 25bp increase takes the midpoint to 4.125%, which rounds to the 4.1% median exactly. The September dots contained precisely one more hike in 2026, and after October passed without one, December is the only meeting left to deliver it.

Kalshi runs a market on the December dot plot itself, since the December meeting carries a fresh SEP. Its ladder puts the end-2026 median above 4.0% at a 77% midpoint and above 4.1% at only 9.5%, which implies the market expects the December median to land on 4.1% and stop there. I would treat those two numbers gently: the strikes trade on books of 729 and 2,336 contracts against spreads of 7 and 8 cents, and a couple of the adjacent strikes are not even monotonic. The direction is informative, the decimals are not.

If you want the dot plot on its own terms rather than as a cut argument, this site's December dot plot preview works through the 2027 dots, which are where the genuine news will be on the 9th.

Why a Cut Was Never a Live Possibility at This Meeting

A rate cut needs one of two things: inflation falling back to target, or a labour market deteriorating fast enough to override inflation. Neither is happening in the data the committee will have on the table on December 8.

Headline inflation running at 5.72% annualised over three months is not a cutting environment under any framework the Fed has described. Core is cooler at 3.75% but still comfortably above the 2% objective, and core PCE, the gauge the objective is actually defined against, has been sitting near 3% rather than drifting down.

The labour market gives the cut camp nothing either. Unemployment at 4.1% is exactly the committee's own September projection for the end of the year, payrolls added 165,000 in October, and the three-month average is 137,000. That is a labour market in balance, not one in distress.

Then there is the vote itself, which is the part most pages skip. At the October 27-28 meeting the committee held the range at 3-3/4 to 4 percent by 10 votes to 2, and both dissenters, Governor Lisa Cook and Cleveland Fed President Beth Hammack, preferred an immediate quarter-point increase. The statement said plainly that inflation remains elevated. A committee whose only dissents are hawkish is not a committee four weeks from a cut.

How These Cut Contracts Actually Settle

Before you act on a 0.35%, check what it is 0.35% of. The two venues frame the same decision differently, and the difference matters at the edges.

Polymarket resolves on the change in the upper bound of the target range versus the level immediately before the December meeting, rounded up to the nearest 25bp bracket. So "25 bps decrease" means the upper bound goes from 4.00% to 3.75%. It is a market on the move, not on the level, which is why its ladder reads cleanly against the Fed's own language.

Kalshi frames each leg as a question about what the Fed does at that meeting, with a separate contract per size and direction, closing on December 9. Its legs are therefore exclusive in the same way, and the five midpoints in my first table sum to 101%, which is as coherent as a one-cent tick permits.

One practical consequence: a 0c bid on Kalshi is not the same statement as a 0.3c bid on Polymarket. Kalshi quotes in whole cents, so its floor is 1% of a contract and anything below that reads as zero. Polymarket's tenth-of-a-cent tick is why it can show 0.35% and 0.25% as different numbers at all. When you see Kalshi at 0.5% and Polymarket at 0.35%, that is a tick-size artifact, not a disagreement.

When the First Cut Is Actually Priced

"Will the Fed cut rates" is a better question with a horizon attached. Kalshi runs a cumulative series, Next Fed rate cut, that asks whether the next change in the target range is a cut announced before a given date. That is the framing a reader wants and almost nobody publishes.

Three independent books answer the rest-of-2026 question and they land in the same place. Polymarket's 98.1% on zero cuts leaves 1.9% for one or more, Kalshi's deep any-cut contract says 1.65%, and the December meeting itself prices at 0.35%. The gap between 1.65% and 0.35% is the unscheduled-cut window between December 10 and 31, which is exactly what you would expect it to be.

Push the horizon out and the picture changes, slowly. A cut before July 2027 prices at 38.5%, and a cut before 2028 at 61%. Those are real probabilities rather than rounding, but they come off books that have traded under 2,000 contracts in their lives against spreads of 3 to 6 points. I would quote the number and the spread together every time, and this site's 2027 cut-odds piece goes through that ladder meeting by meeting.

Note what the cumulative ladder implies about sequencing. The market is not pricing a pause and then a cut. It is pricing another hike in December, a coin-flip January, and the first cut somewhere in the second half of 2027. Polymarket's January 2027 ladder reads 50.5% no change against 47.5% for a 25bp hike, and March 2027 reads 44% against 47%.

What Would Have to Change for a December Cut

A 0.35% probability is not zero, and it is worth knowing what the market thinks would have to break for it to pay. Between this morning and December 8 there is one more employment report and one more CPI print, plus the PCE release for October.

• A labour-market shock, not a softening. Unemployment at 4.1% would need to jump by several tenths in one report, or payrolls would need to print deeply negative with downward revisions attached. A 50,000 miss does not do it; the October report already came in at 165,000.
• A credit or funding event. Every inter-meeting cut in the Fed's modern history followed a market dislocation rather than a data release. This is the scenario the whole-year contracts price above the meeting contract, and it is worth about 1.3 points of probability.
• An inflation collapse that has not started. Core at 3.75% annualised over three months would need two consecutive very soft prints to get near target, and the November CPI lands too late to be the second one.
• A committee that reverses its own dissents. Two members wanted to hike in October. For a cut to pass in December, those two plus most of the majority would have to change direction inside six weeks, with inflation above target and unemployment at their own projection.

None of those is impossible, and that is precisely what 0.35% means. It is not a forecast that the world is stable. It is a price on a specific, identifiable set of tail events, and the market is charging a third of a cent for them.

How to Read the December 9 Decision as It Happens

The decision drops at 2:00 p.m. ET on Wednesday December 9, and because this is a projection meeting the dot plot arrives with it rather than three weeks later. That makes the next few minutes unusually dense.

If you are watching the ladder live, the signal is not the 25bp leg, which is already at 85.5% and has limited room. Watch the 50bp leg and the no-change leg. Those two carry almost all of the remaining uncertainty, and today showed they move against each other rather than together.

For the broader setup, the Fed decision odds hub tracks every open contract on this meeting next to the official rate, the FOMC calendar carries the full 2026 and 2027 schedule, and the track record page shows how these contracts have resolved against their pre-meeting prices so far this cycle.