Will the Fed raise rates at the September 2026 meeting?
The market has swung from expecting a hike to expecting a hold in under a month, on one bad payrolls print. Two data releases land before the decision, and either can swing it back.
What actually settles this
sourcedSettles on the target federal funds range announced by the FOMC at the conclusion of its 16 September 2026 meeting, at 2:00pm ET. A 25bp increase to the target range resolves YES.
This is a single-meeting contract, not a view on the year. A hike announced in October resolves this NO. People who believe "the Fed will hike this cycle" and buy this contract are buying a much narrower claim than the one they hold, and the September and October contracts trade at very different prices for exactly that reason.
Kalshi frames the strike as "Hike rates by 25bps"; Polymarket as "increase interest rates by 25 bps". Both settle on the announced target range, so the wording difference has no effect here — but note that Kalshi separately lists a ">25bps" strike, so a 50bp move resolves the 25bp contract NO on both venues.
Verified against both venues' published rules on 28 Aug 2026.
Where informed markets disagree
liveCME FedWatch, derived from fed funds futures, put September hike odds at 44% immediately after the July payrolls report. Prediction markets currently price it materially lower. Two informed markets disagreeing by that margin usually means one has absorbed something the other has not, or that the futures figure is stale.4
Prediction markets are pricing 48% as this page loads.
A September hold is not being priced as a deferral. The October 25bp hike contract trades at 23% against September’s 30% on Kalshi, so the market reads a hold as a hold rather than as the same move one meeting later. Treat that signal cautiously: the October contract has turned over about $34k against September’s $3.17m, so it is thin enough that its price carries far less information.
Read off venue prices on 28 Aug 2026. Prices move; this one is a snapshot, not a live figure.
How it got here
sourced- The Fed held rates at its July 2026 meeting, but three FOMC members dissented in favour of a hike — an unusually divided committee going into September.1
- Before the July payrolls print, a 25bp September hike was the expected outcome, driven by Iran-related energy supply shocks and doubts about the Fed’s inflation credibility.5
- The July jobs report, released 7 August, showed payrolls fell by 23,000 against expectations of 80,000–95,000 gains, with a further 103,000 of negative revisions and wage growth at 3.2%.2,3,4
- Headline CPI has been running at 3.4% year on year, well above the Fed’s 2% target, with core measures rebounding in July after a weak June.6
What happens before it resolves
sourced| 4 Sept 2026 | August employment situation | A second consecutive weak payrolls print would make a September hike very hard to justify. A sharp rebound revives it, and would likely reverse most of the move since 7 August.7 |
| 11 Sept 2026 | August CPI | Widely described as the deciding input. Morgan Stanley’s Ellen Zentner said the weak payrolls print eases pressure to hike "but next week’s inflation data will still likely be the deciding factor". Lands five days before the decision.7,4 |
| 16 Sept 2026 | FOMC decision, 2:00pm ET | Resolution. The announced target range settles the contract.7 |
The case each way
sourcedFor a hike
- Three members already voted to hike.
Dissent at the July meeting means the hawkish bloc does not need to be persuaded from scratch — it needs one or two more votes, which a hot CPI print could supply.1
- Inflation is not at target and energy is a live upside risk.
Headline CPI at 3.4% with Iran-related supply pressure on energy is the exact configuration that produced the pre-August expectation of a hike.6,5
Against
- The labour market just turned negative.
Payrolls contracting by 23,000 with 103,000 of downward revisions is not a backdrop in which committees tighten. Hiking into a weakening labour market carries a policy-error risk the Fed has historically avoided.2,4
- Wage growth is consistent with the target.
Wage growth at 3.2% is broadly consistent with 2% inflation, weakening the case that inflation is becoming self-sustaining rather than supply-driven.3
- A hold is the low-regret option.
With one more payrolls print and one more CPI landing before the meeting, waiting costs the committee very little, and October is available if the data turns.4
What would change your mind
our reading- August CPI on 11 September coming in materially above expectation — the single most likely trigger for a repricing.
- August payrolls on 4 September rebounding strongly, reversing the labour-market argument.
- Any further FOMC member signalling a shift to the hawkish side before the blackout period.
- A sustained energy move on Iran-related supply disruption feeding into headline inflation.
What this brief does not establish
our reading- We have not verified the current CME FedWatch figure. The 44% cited dates from 7 August and may have moved since.
- The October contract used for the deferral comparison is thinly traded, so its price is a weak signal rather than a firm one.
- We have no independent read on the internal balance of the committee beyond the reported July dissents.
- Base rates are of limited use here. Meeting-level hike decisions under a divided committee with a new chair have few clean historical analogues.
- Nothing here forecasts the outcome. It is the information we could establish and source, not a probability estimate.
Sources
- 1Divided Fed holds interest rates steady, but three members voted to hike — CNBC, 29 Jul 2026
- 2Jobs report July 2026 — CNBC, 7 Aug 2026
- 3Weak July Jobs Report Cools Rate-Hike Odds — Kiplinger, 7 Aug 2026
- 4Will the negative jobs report hold off a September rate hike? — HousingWire, 7 Aug 2026
- 5Will the Fed Hike Rates in September? A 25-Basis-Point Move Is Now Expected — Chase, 3 Aug 2026
- 6An inflation report Wednesday should be a big deal for the Fed — CNBC, 11 Aug 2026
- 7US economic calendar — September 2026 — CalendarX, 28 Aug 2026
A brief is information, not a recommendation. Kramma does not forecast this outcome, does not tell you what to do, and does not route orders. Everything above is either sourced, computed live, or labelled as our reading.