Polymarket bettors now see a 64% chance the Federal Reserve holds interest rates in September, down from higher levels before two days of congressional hearings with Fed Chair Kevin Warsh. Lawmakers used the sessions to press Warsh on inflation, arguing prices are still climbing too fast for households and businesses.
Why the odds shifted
The probability of a rate hold fell after Warsh faced pointed questions from both parties. While the chair drew few major missteps during the hearings, the sustained pressure from lawmakers appeared to weigh on market expectations. Polymarket, a decentralized prediction platform, showed the 64% figure after the hearings concluded, reflecting a notable drop from earlier in the week.
Lawmakers' inflation concerns
During the hearings, multiple committee members told Warsh that the pace of price increases remains unacceptable. They cited recent data showing core inflation still above the Fed's 2% target. The lawmakers pressed for more aggressive action, though Warsh did not commit to any specific policy changes in his responses.
Warsh orders inflation gauge review
In a direct response to the hearings, Warsh ordered reviews of the inflation gauges the Fed uses to guide its decisions. The move suggests the central bank is taking the legislative pressure seriously, even if it does not immediately alter its rate path. The reviews will examine whether the current metrics accurately capture price pressures in the economy.
The Fed's next rate-setting meeting is scheduled for September. With odds of a hold now at 64%, the market is pricing in a meaningful chance of a cut. The outcome will depend on incoming data and the results of the inflation gauge reviews Warsh has ordered. Investors will be watching for any signals from the Fed in the weeks ahead.
