77% of Polymarket Traders Expect a 25-basis-point Rate Cut at Fed Meeting
Date: 2024-09-04 Author: Oliver Abernathy Categories: BUSINESS
A majority of Polymarket traders are betting on a federal funds rate cut as the Federal Open Market Committee (FOMC) meeting scheduled for September 17-18 approaches.
Data from the decentralized betting platform shows that 77% of traders expect a 25-basis-point rate cut, reflecting a strong consensus on the issue.
The rate, which saw $10.9 million in trading volume, also points to a 21% chance of a larger 50-basis-point cut, while only 3% of traders believe the rate will remain unchanged.
Key Economic Indicators Drive Rate Cut Expectations
A number of key economic indicators are driving rate cut expectations.
Lower inflation and a weaker labor market are fueling expectations that the Federal Reserve may take action to provide additional support to the economy.
These factors are consistent with the Fed’s dual mandate to control inflation and stimulate economic growth.
While most analysts agree that a 25 basis point rate cut is likely, they also note that a larger rate cut could be considered if economic conditions worsen.
Fed Chair Jerome Powell recently said at the Jackson Hole Symposium that “the time has come” for the Fed to cut interest rates.
Very weak data could make a 50 basis point rate cut more likely, while strong data could rule out a larger rate cut, according to Investec economist Lottie Gosling.
“While Powell declined to comment on whether the door might be open to a 50 basis point rate cut in September, we suspect that further apparent deterioration in the labor market could push the FOMC to more aggressive easing,” he commented.
In addition, analysts are forecasting a decline in Bitcoin volatility as markets brace for a possible Federal Reserve rate cut cycle.
Bloomberg to Integrate Polymarket Election Betting Data into Terminal
As previously reported, leading financial data and news provider Bloomberg LP plans to integrate election betting data from cryptocurrency betting platform Polymarket into its widely used terminal.
Polymarket, a blockchain-based prediction market running on the Polygon network, has become the leading platform for tracking election bets in real time.
The platform allows users to bet on a wide range of event outcomes using transparent blockchain data and smart contracts to execute trades and payouts.
According to Dune Analytics, Polymarket trading volume reached $450 million in August, with about $760 million wagered on the outcome of the U.S. presidential election as of the end of August.
Last month, five U.S. senators and three members of the House of Representatives called for a ban on bets related to the upcoming 2024 presidential election.
The bipartisan group includes prominent figures such as Senators Jeff Merkley, Richard Blumenthal, Elizabeth Warren, and Representatives Jamie Raskin and John Sarbanes, among others.
The group expressed concern that billionaires could use large bets to influence the outcome of elections, thereby undermining public confidence in the democratic process.
