The Fed has cut rates 23 times in the past 25 years. Major bank economists predicted exactly three of those cuts more than two weeks in advance.
Three out of 23. A 13% hit rate from the people whose entire job is forecasting Fed policy.
Here's what the market is actually pricing for the next FOMC meeting, and why the consensus is once again on the wrong side of the move.
The number nobody agrees on
The Fed funds rate sits in a range that economists insist will move "soon." The same economists insisted that 18 months ago, and 12 months ago, and six months ago.
Consensus forecasts for the next meeting cluster around "hold." Prediction-market-implied probabilities tell a different story. Fed funds futures are pricing a meaningful chance of a cut at the next meeting and a near-certainty of one within the next two.
That gap between consensus and market is where the actionable information lives.
What the Fed actually watches
Three data series move FOMC decisions more than anything else.
Core PCE inflation. The Fed's preferred measure. Anything above 2.5% keeps the committee cautious. Anything below 2.2% opens the door to cuts.
Non-farm payrolls. A single weak report can flip the meeting. The committee has cut multiple times in response to one bad jobs print.
Financial conditions. The Fed watches the S&P 500, credit spreads, and the dollar index more than it admits. When conditions tighten unexpectedly, cuts come faster than the dot plot suggests.
Forecasts that ignore these three inputs are basically guessing.
What the prediction markets are saying
Fed funds futures are the closest thing the world has to a real prediction market for monetary policy. They aggregate billions of dollars of bets from professional traders, every minute of every trading day.
The current implied probability of a cut at the next FOMC meeting sits notably above the Wall Street consensus. The implied probability of at least one cut by year-end is even higher.
This isn't unusual. Historically, Fed funds futures have predicted policy changes more accurately than Wall Street strategists, especially at horizons of three to six months out.
Polymarket and Kalshi now offer event contracts for FOMC outcomes too. They tell the same story. When multiple independent prediction venues converge on a number, that number is the one to trust.
The three scenarios for the next decision
Scenario one: hold. Inflation stays sticky, jobs remain strong, the Fed stays patient. Risk assets correct, dollar strengthens, gold sells off.
Scenario two: 25-basis-point cut. The committee acknowledges softer data and starts the easing cycle. Risk assets rally, dollar weakens, gold catches a bid.
Scenario three: hold with a dovish statement. The Fed signals cuts are coming without doing one yet. Markets move, but less violently than scenario two.
The market is currently pricing something between scenario two and three. The consensus is pricing closer to scenario one.
What the bond market sees that strategists miss
The yield curve has been signaling slower growth for months. The 2-year Treasury yield has been falling faster than the 10-year, which historically precedes Fed cuts.
This is not a forecast. It's a vote — billions of dollars of money saying that the economy is softening faster than the headlines suggest, and the Fed will eventually have to acknowledge it.
Strategists who only look at the headline data miss this. Strategists who look at the bond market don't.
Why this matters beyond the next meeting
Every major asset class is implicitly betting on Fed timing. Stocks are priced for a soft landing. The dollar is priced for steady rates. Gold is priced for a cutting cycle. Bitcoin is priced for liquidity. They cannot all be right.
When the Fed acts — or doesn't — at the next meeting, one of those bets will resolve in the market's favor and the others will need to reprice. Knowing which one before it happens is the entire game.
How Juno fits in
Juno is a prediction market for the kinds of questions Fed funds futures and options can't easily express. Will the Fed cut 50bps before September? Will the dot plot show fewer cuts in 2026 than it does now? Will the next FOMC statement use the word "patient"?
Each contract aggregates real beliefs from people willing to back their view. The spread tells you not just the consensus probability, but the confidence behind it.
The 23-out-of-25 reality
The Fed has been more dovish than the consensus expected almost every time over the past 25 years. The market priced it sooner. The strategists caught up later.
The next Fed decision will probably surprise the consensus again. The only question is which direction.
That's a question worth pricing.