Forecast Contract Volumes Eclipsed 1.1 Million Yesterday, Dominated By Fed Funds: Sep. 18, 2025  

IBKR ForecastTrader transactions exceeded 1.1 million yesterday with the action dominated by contracts addressing the US Fed’s interest rate decision. The day’s volume of 1.1299 million set a year-to-date high and occurred as the fed funds instruments maintained their position as one of our most popular choices. What’s drawing folks to fed funds opportunities in our prediction market is that the selections are clear cut, making them easy to understand as shown in the following examples:

• Will the Fed lower by 25, 50 or more?
• Will it raise by 25, 50 or more?
• Will it make no change?

Furthermore, liquidity is buoyant. The simplicity and market depth are strong value-adds, enabling platform participants to make large purchases based on easy-to-understand concepts. Conversely, other alternatives can be complex, difficult to grasp and illiquid. We’re seeing investors, hedgers, speculators, arbitragers, market makers and people from many walks of life take advantage of the wide-ranging possibilities across our marketplace amidst a nearly endless buffet of contracts related to economic, financial, political, government and climate events as well as other developments.

Platform Participants Expect Another Cut Next Month

Contract traders place an 83% probability of the Fed cutting by 25 basis points (bps) next month, an 11% likelihood of a pause, and around a 6% chance of a significant reduction of 50-bps or greater. Hikes are off the board for October.

New FOMC Dissenter Contracts Gain Traction

Our recently launched instruments related to dissenting FOMC members at specific meetings are also gaining traction. There are contracts asking if any official will dissent, as well as exactly how many will formally disagree with an interest rate decision. Platform users expect at least one dissenter in October with an elevated degree of confidence as depicted by the “Yes” answer costing $0.88. Meanwhile, there is a 6% chance of no dissent, a 53% likelihood of one, 16% odds of two and a 25% probability of three. Having four dissenters is off the board.

Dissenter Arbitrage Alert

A discrepancy across the above choices is providing what I believe is an attractive opportunity that can occur in new, modern markets like ours. Folks can buy the “Yes” at $0.88 for the question asking if any members will dissent and the “Yes” at $0.06 for exactly 0 members dissenting. The total cost of the trade is $0.94 but it pays out $1.00 whether there’s a formal disagreement in the committee or not, because one side or the other must be correct: the settlement must be either 0 or more than 0. Additionally, participants will earn about 41 days of interest-like incentive coupons that annualize at 3.58% and shift in proportion to the values of the positions.

Source for Images: ForecastEx

Note: Prices are highest bids as of the morning of September 18, 2025.

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