The Federal Reserve’s interest rate trajectory has always served as a "barometer" for the crypto market—rate cuts inject liquidity and drive risk assets higher, while hikes or prolonged tightening suppress valuation expansion. As we move into the second quarter of 2026, market expectations for rate cuts have taken a sharp turn. As of April 16, what signals are the two leading prediction platforms, CME FedWatch and Polymarket, sending?
CME FedWatch: Zero Probability of Rate Cuts Before June
According to the latest data from the CME "FedWatch" tool on April 16, there is a 98.4% probability that the Federal Reserve will keep rates unchanged in April, with only a 1.6% chance of a 25-basis-point hike. More importantly, market pricing now shows a 0% probability of a cumulative 25-basis-point rate cut by June, a 98% probability of rates remaining unchanged, and a 2% probability of a 25-basis-point hike.
This means traders have completely ruled out the possibility of rate cuts before mid-year and have even started pricing in the "contrarian option" of a hike. Looking at the full year, the CME tool indicates the market currently sees about a 29% chance of a Fed rate cut by year-end, down sharply from 40% a month ago. Expectations for total cuts this year have been slashed from 2–3 to at most 1, with the first window for a cut pushed back to September or later.
Polymarket: The "Vote" from Prediction Markets
Polymarket offers another key window into rate cut expectations, as it reflects the collective judgment of market participants through real-money wagers.
According to information published by Gate, as of early April, Polymarket prediction markets showed the probability of zero Fed rate cuts in 2026 had surged past 39%, a 24% jump in the short term; the probability of three cuts dropped to just 9%, down 28% over the same period. This data vividly illustrates how confidence in rate cuts this year is rapidly collapsing. Back in mid-March, Polymarket bets still showed a 30% probability for one cut (25 basis points), 23% for no cuts, and 23% for two cuts (50 basis points), with total trading volume already exceeding $10.25 million. Following the March CPI release and escalating Middle East tensions, expectations have shifted decisively toward "zero cuts."
Fed Dot Plot: From Three Cuts to a Sudden Brake at One
If prediction markets capture traders’ short-term sentiment, the Fed’s official dot plot represents policymakers’ medium- and long-term baseline expectations.
By the end of 2025, the median forecast from Fed officials was still for 75 basis points of cuts in 2026 (about three cuts). But after the March 2026 FOMC meeting, the dot plot slashed this projection to just 25 basis points (only one cut), with four members even arguing there should be no cuts at all this year. The meeting concluded with an 11–1 vote to keep the federal funds rate target at 3.50%–3.75%, with only Governor Milan voting in favor of a 25-basis-point cut.
Bulls vs. Bears: One, Two, or Zero Cuts?
Minutes from the March 2026 FOMC meeting reveal deep divisions within the Fed over the rate path, with views on zero, one, or two cuts nearly evenly split. This divergence is reflected among institutional analysts as well:
- One Cut Camp: Dongfang Jincheng analyst Bai Xue believes that, based on the March dot plot, Powell’s statements, and geopolitical factors, there is a high probability of a single rate cut in 2026, most likely at the September meeting. Yellen has also suggested there could be one cut later this year.
- Two Cuts Camp: Bank of America maintains its forecast for 25-basis-point cuts in both September and October, totaling 50 basis points for the year, but admits "our forecast is on shaky ground, with risks tilted toward no cuts." Goldman Sachs also expects 25-basis-point cuts in September and December.
- Zero or Even Hike Camp: Former dovish official Goolsbee has said that if oil prices remain elevated, rate cuts may be postponed until after 2027. Some traders have even begun pricing in the possibility of a rate hike before the end of 2026.
Why Have Rate Cut Expectations Cooled So Dramatically?
Two core variables have driven this sudden reversal in rate cut expectations.
First, inflation has rebounded. In March, US CPI rose 3.3% year-over-year, accelerating sharply from February’s 2.4%; the month-over-month increase was 0.9%, the largest since June 2022. The energy index soared 10.9% month-over-month, and gasoline prices jumped 21.2%, accounting for nearly 70% of the overall CPI increase.
Second, job market resilience. Nonfarm payrolls rose by 178,000 in March, far exceeding the market’s expectation of 60,000 and marking the highest level since December 2024. The unemployment rate fell back to 4.3%. This robust labor market gives the Fed confidence to "stay the course."
Potential Impact on Crypto Assets
For crypto investors, the evolution of rate cut expectations means the timing of liquidity releases remains uncertain. As Gate’s analysis points out, the crypto market also stands at a critical juncture—as of April 13, the Bitcoin price was $71,216.2, the Ethereum price was $2,203.29, and the GT price was $6.61. With macro rate uncertainty and heightened crypto asset volatility, investors may want to consider both principal-protected and floating-rate products within Gate’s wealth management suite, allocating flexibly according to their own risk preferences.
Conclusion
Drawing on CME FedWatch, Polymarket prediction markets, the Fed’s dot plot, and major institutional viewpoints, as of April 16, 2026, market expectations for Fed rate cuts this year have been sharply reduced from 2–3 at the start of the year to just 0–1. Polymarket data shows the probability of "zero cuts" has surpassed 39%, while CME FedWatch indicates zero probability of a cut before June. The March inflation rebound and strong job market are the main drivers of this shift in expectations. Although some institutions (such as Bank of America and Goldman Sachs) still forecast 1–2 cuts, there is broad consensus that the risk is clearly skewed toward no cuts. The trajectory of Middle East tensions and inflation data over the coming months will be key variables in determining the number of cuts. Investors should remain flexible and continue to monitor macro data and market signals on the Gate platform.
