Market expectations for a potential Federal Reserve interest rate hike in 2026 surged to 37% on Polymarket as U.S. Treasury yields climbed to their highest levels since 2007 and inflation moved back above 4%.
The rising odds reflect growing investor concerns that the Federal Reserve may be forced to maintain a restrictive monetary stance for longer than previously expected.
Analysts believe persistent inflationary pressures could push the Fed to reconsider its expected rate-cut path — or even return to additional tightening if economic data continues to come in stronger than forecast.
The developments have also weighed heavily on risk assets, including equities and cryptocurrencies, as global markets react to increasing uncertainty surrounding future U.S. monetary policy.