Prediction Markets: Fed Turns to Kalshi for Policy Signals

The Federal Reserve has long relied on traditional surveys and futures markets to gauge economic sentiment, but a new era of high-frequency data is emerging.

A February 2026 working paper by Federal Reserve economists suggests that prediction markets, specifically the regulated platform Kalshi, now offer superior real-time signals for monetary policy.

Key Takeaways

• Federal Reserve researchers endorse Kalshi as a "valuable benchmark" that outperforms traditional surveys and Fed funds futures in real-time accuracy.

• Kalshi has maintained a perfect forecast record for FOMC interest rate decisions on the day prior to meetings since 2022.

• Unlike periodic surveys, Kalshi’s macro markets provide continuous, intraday probability density functions for CPI, GDP, and unemployment.

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Kalshi Prediction Markets Explained for Macro Forecasting

The Kalshi prediction markets explained in the recent Fed study highlight a shift toward market-based expectations for measuring the economy.

Researchers Anthony Diercks and Jonathan Wright argue that traditional tools, such as the Bloomberg CPI consensus, often become "stale" compared to live trading data.

Kalshi allows participants to trade directly on economic outcomes, creating a financial incentive that filters noise more effectively than professional opinion polls.

By analyzing high-frequency trade data, the Fed can observe how market "beliefs" shift instantly following a major data release or a speech by a central bank governor.

Sources: @mansourtarek_ on X

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Why the Fed Uses Kalshi Data for Expectations

The reason the fed uses Kalshi data lies in its "rich intraday dynamics," which capture market reactions that traditional daily data points often miss.

For example, when Fed Governors Christopher Waller or Michelle Bowman deliver public remarks, the implied probability of a rate cut can shift within minutes.

The Kalshi event betting platform provides a unique "risk-neutral probability density function," mapping out every possible outcome and its perceived likelihood.

This level of granularity is statistically superior to Fed funds futures, which are often too distant from the actual policy question to provide clear signals.

The Role of Prediction Markets for Policy and Macro Analysis

The use of prediction markets for policy is gaining traction as central banks seek to navigate the "Goodhart’s Law" dilemma of metric reliability.

In the Kalshi macro markets, traders are currently pricing a nearly certain "hold" on interest rates for the upcoming January sessions.

The fed research Kalshi paper emphasizes that while these findings are preliminary, the platform could become the new "Bloomberg" for real-time macro forecasting.

As regulatory clarity improves through the proposed CLARITY Act, these markets are expected to see even higher institutional participation and liquidity.

Conclusion

Federal Reserve researchers have positioned Kalshi as a critical supplement to the central bank's existing economic forecasting toolkit.

The platform’s ability to react to news in real-time provides a level of speed and accuracy that traditional surveys cannot currently match.

While the Fed’s official policy remains cautious, the endorsement of these "macro markets" signals a broader acceptance of decentralized information aggregation.

As the 2026 economic cycle continues, the integration of high-frequency prediction data will likely refine how monetary policy is communicated to the public.

FAQ

Does the Federal Reserve officially use Kalshi to set interest rates?

No, the Fed uses its own internal models, but researchers now officially recommend using Kalshi data as a real-time signal to inform those decisions.

How accurate are Kalshi’s economic forecasts?

Kalshi has correctly predicted every FOMC rate decision since 2022 and has shown a statistically significant edge over Bloomberg CPI estimates.

What are Kalshi macro markets?

These are regulated event contracts where traders bet on specific outcomes for GDP, inflation (CPI), and employment figures rather than traditional stocks.

Is Kalshi a regulated platform for event betting?

Yes, Kalshi is the largest federally regulated prediction market in the U.S., overseen by the Commodity Futures Trading Commission (CFTC).

Why is prediction market data better than professional surveys?

Prediction markets update continuously based on financial stakes, whereas surveys are periodic and can reflect outdated sentiment by the time they are published.

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