Based on Gate’s latest prediction market data, the probability that market funds are betting on the Fed raising rates in 2026 has surged to 55%, whereas in early March 2026, that figure was still below 10%. In only one quarter, market expectations have undergone a dramatic reversal—from “hopes of rate cuts” to “betting on rate hikes.” What deep re-shaping of the Fed’s decision-making logic is reflected behind these near-unanimous signals across different cross-market tools?
May Nonfarm Payrolls: “The last straw that crushed the rate-cut hopes”
If you have to find a trigger point for this rate-hike expectation storm, the May 2026 Nonfarm Payrolls report is undoubtedly the most critical catalyst.
On June 5, data released by the U.S. Department of Labor showed that May Nonfarm Payrolls added 172,000 jobs—nearly double the 85,000 expected by the market, and also far above April’s 115,000. The first two months’ data were collectively revised upward by 93,000. Over the past three months, the number of new jobs has posted the largest increase in more than two years.
This broad, upside-better-than-expected performance in employment data forced global investors to re-evaluate the pricing framework for major asset classes. The CME FedWatch tool shows that traders expect the probability of the Fed raising rates by the end of 2026 (before December 2026) to exceed 70%, up sharply from 45% just a week earlier. Before the employment data were released, the timing of the rate hike was generally priced for March 2027, with probabilities around 60%; after the May Nonfarm data came out, the interest-rate futures market has fully priced in the Fed’s expectation to raise rates by 25 basis points before the policy meeting in December 2026.
Notably, the strong employment growth did not occur in the context of an overheated labor market. The unemployment rate stayed at 4.3% in May, while average hourly earnings rose year over year by 3.4%, down from 3.6% in April. This “strong jobs, weak wages” combination suggests the economy is still far from the stage where a truly malicious inflation spiral is unleashed via a “wage-price spiral.” But in terms of the Fed’s policy decision framework, if such strong employment growth continues, it may still apply pressure to inflation through the demand channel in the end—so the Fed does have reason to maintain a more hawkish stance rather than waiting on the sidelines.
Inflation rebound: Energy shocks layered on structural pressure
Employment data is only half the story. The sustained warming in inflation is the more fundamental driver behind the rising rate-hike probabilities.
In April 2026, the U.S. CPI year-over-year growth rate rose to 3.8%, the highest level since May 2023, significantly above the prior 3.3%. In the same month, core CPI’s year-over-year growth also reached 2.8%, again exceeding market expectations. Energy prices remain the main driver of inflation—conflict in the Middle East has caused year-over-year prices of energy commodities to jump by nearly 30%.
The market broadly expects May CPI—about to be released—to rise further to 4.2% year over year, and core CPI to rise to 2.9%. Goldman Sachs expects that three factors—tariff pass-through effects, high oil prices triggered by the war, and AI demand—will keep full-year 2026 core PCE inflation above 3%, far above the Fed’s 2% target, leaving the Fed with little urgency to cut rates in the near term.
Facing strong employment data and persistent inflation pressure, major Wall Street investment banks have all walked back their forecasts for Fed rate cuts in 2026. On June 6, Goldman Sachs completely abandoned this year’s rate-cut expectations, pushing the final two rate-cut dates significantly to June 2027 and December, while raising the probability of a rate hike in 2026 from 10% to 20%. Even Castle Securities warned that, to deal with steadily rising inflation, the Fed may soon need to raise rates, pointing to a strong labor market, high energy costs, and large-scale investment in AI as key factors driving U.S. inflation pressure.
Now, among large Wall Street banks, only Citibank still firmly maintains its forecast that the Fed will cut rates three times in 2026. The bank’s prediction of the Fed’s policy direction last year was the most accurate, but it is now increasingly isolated. JPMorgan Chase has been forecasting since January of this year that the Fed will raise rates in 2027; after the latest employment data release, BNP Paribas further shifted toward a hawkish stance, expecting the Fed to raise rates three times in a row starting from December 2026.
Waller’s debut: Three dimensions to watch for the hawkish signal
From June 16 to 17, the Fed’s newly appointed chair, Kevin Waller, will preside over his first policy meeting since taking office. This is both a turning point for policy and a crucial window for reshaping the communication framework.
The market will focus on three signal dimensions:
First, whether the policy statement deletes the “accommodative bias” wording. That phrase was written into the policy statement in December 2025, when the Fed had just completed three consecutive rate cuts. Former Cleveland Fed chair Mester believes deleting the wording is a “pretty direct and relatively painless” way to show the market that Waller will be guided by economic data in policy-making, and it also helps him dispel the market impression that he only caters to rate-cut preferences.
Second, whether the dot plot shows expectations for rate hikes. A chief U.S. economist at Deutsche Bank said the updated dot plot may show more officials expecting rate hikes rather than rate cuts—clearly contrasting with this past March, when no one marked expectations for rate hikes; among 19 officials, only 7 expected one rate cut this year, and 7 leaned toward keeping policy unchanged.
Third, whether the risk distribution chart tilts toward inflation. A chief U.S. economist at Morgan Stanley pointed out that the Fed’s risk chart may show rapidly rising concerns about inflation upside, while worries about the labor market may have eased somewhat—providing a theoretical basis for a policy shift toward rate hikes.
Gate prediction market: Why real-time data is more referential than traditional tools
In interpreting the Fed’s policy direction, prediction markets are becoming an increasingly important source of information.
Compared with traditional macroeconomic indicators, the core advantages of prediction markets are real-time responsiveness and the authenticity of capital-driven signals. Macro data releases have obvious lags—employment data is often already at month-end after release, and CPI data comes with about a one-month delay. By contrast, the Gate prediction market provides a real-time mapping of the most authentic and freshest market sentiment and capital direction by aggregating large amounts of genuine capital input from professional market participants. When major changes occur, capital flows often reflect market sentiment earlier than surface-level data.
Gate has recently rolled out a series of functional upgrades to prediction markets, focusing on lowering the barrier to use and improving trading efficiency. The platform introduced AI-assisted features to help organize event background, key impact factors, and the focus of market discussion—further strengthening the capital observation function. This lets users track representative capital movements in the market and major changes in top positions. These upgrades make participation more intuitive and gradually turn prediction markets into a new kind of market scenario that blends information interpretation, market sentiment, and trading strategies.
Key takeaways summary
Combining Gate prediction market data, mainstream institutional views, and the macroeconomic backdrop, the current market landscape around the Fed’s 2026 rate-hike expectations can be systematically organized into the following points:
- The probability of rate hikes has jumped sharply. Gate prediction market funds are pricing in a 55% probability of the Fed raising rates in 2026, a drastic reversal from the sub-10% level in early March. This reflects that market expectations have completed the switch from “rate-cut hopes” to “rate-hike bets” within just three months.
- Upside-surprising employment data is the direct catalyst. May Nonfarm payrolls added 172,000 jobs, far above the 85,000 expected—setting a new two-and-a-half-year high for the three-month average.
- The inflation rebound trend continues. April CPI rose to 3.8% year over year; the market expects May CPI to rise further to 4.2%. Energy shocks, tariff pass-through, and AI demand jointly push up price pressure.
- Wall Street institutional views are highly divergent. Except for Citibank, most major investment banks have abandoned their expectations for 2026 rate cuts. Goldman Sachs raised the rate-hike probability from 10% to 20%, while BNP Paribas expects three consecutive rate hikes starting in December.
- Waller’s debut meeting will release key signals. The June FOMC meeting is Waller’s first policy meeting after taking office. The market is closely watching three signals: whether the policy statement deletes “accommodative bias,” whether the dot plot shows expectations for rate hikes, and more.
- A June “stay put” decision is nearly locked in; the dispute over the timing of rate hikes lies in the second half. CME data shows a 98.2% probability that rates will remain unchanged in June. The market is pricing rate-hike timing distributed across September to December, with the probability of a hike in December already fully priced in—some traders have even started betting on action in October.
- Prediction markets have become an important reference tool for interpreting policy direction. Gate prediction markets provide real-time, capital-driven sentiment references via capital flow directions, AI analysis, and aggregation of popular events. As of June 10, 2026, Gate prediction market data shows that rate-hike bets remain at a high level of 55%.
Green Pitch Prophet: Gate prediction market’s limited-time World Cup event
While focusing on Fed policy, Gate prediction market (Gate Polymarket) is also launching a limited-time event for the 2026 football spectacle called “Green Pitch Prophet.” The event’s total prize pool exceeds 500,000 USDT, running from June 4, 2026 to July 21, 2026. Users can register to receive prediction tickets for free. By completing tasks such as spot, derivatives, CFD, and VIP upgrades, users can earn more experience tickets and prediction tickets to participate in football match predictions. The top 100 on the prediction points leaderboard can share 30,000 USDT and a limited-edition jersey gift box, and the championship prediction prize pool also includes 5,000 USDT. VIP users can also enjoy exclusive registration rewards and jersey gift boxes. Log in to Gate now and join in the World Cup prediction fun on the prediction market.
Frequently Asked Questions (FAQ)
What does the 55% rate-hike probability on the Gate prediction market really mean?
Answer: 55% means that in the capital-driven contest on the Gate prediction market, the amount of capital betting that the Fed will raise rates in 2026 is slightly higher than the amount betting that it will not. This does not mean a rate hike is “certain to happen,” but it reflects the collective expectation tendency among professional traders and institutional investors in the current market. Unlike traditional polls or analysts’ forecasts, prediction markets use real-money bets, and participants’ interests are directly linked to the prediction outcomes—so the data is often more forward-looking and more valuable as a reference.
If the Fed raises rates in 2026, what impact would it have on the cryptocurrency market?
Answer: In theory, rate hikes typically tighten liquidity in financial markets, which could create short-term price pressure on risk assets (including cryptocurrencies). But historically, crypto markets do not always respond to macro policy in a linear way—sometimes after rate-hike expectations have been fully priced in, negative news can “land” and be followed by a rebound. In addition, the capital moves on the Gate prediction market themselves can also serve as an important reference signal for investors to adjust positions and manage risk.
Why do the rate-hike probabilities shown by CME FedWatch and the Gate prediction market differ?
Answer: The underlying assets and participant groups differ. CME FedWatch is based on federal funds futures contracts and mainly reflects the pricing of traditional financial institutions (banks, hedge funds, etc.). Meanwhile, the Gate prediction market covers global crypto-native users and some traditional capital, with a lower participation threshold and more continuous trading time (7×24 hours). It is normal for the numbers to differ, and it can even offer investors a window for cross-market arbitrage or consensus verification. As of June 10, the CME market is pricing a probability of rate hikes before December 2026 at around above 70%, slightly higher than Gate’s 55%, but the direction is completely consistent.
How can ordinary users participate in rate predictions on Gate?
Answer: Users can find the “Prediction Market” section on the Gate website or app, choose an event related to Fed rate decisions (for example, “Will the Fed raise rates in 2026?”), and then buy shares for “Yes” or “No” based on their own judgment. If the final result matches the direction you bet on, you can earn the corresponding returns. Gate has recently upgraded AI-assisted analysis features and capital-flow tracking tools to help users participate in predictions more rationally.
What is the next key time point?
Answer: The most recent and most important node is the FOMC meeting on June 16 to 17, 2026 (Chair Waller’s debut). The policy statement, dot plot, and economic projections released then will greatly influence subsequent rate-hike probabilities. In addition, the May CPI data to be released after June 10 (market expectation: 4.2% year over year) is also an important near-term catalyst. It is recommended to closely monitor these two major events.
