U.S. Federal Reserve researchers sing praises of prediction markets

CoinDesk

by Jesse Hamilton

February 19, 2026

AI-Generated Deep Dive Summary

The U.S. Federal Reserve has highlighted the value of prediction markets, specifically singling out Kalshi in a recent research paper. The study found that Kalshi’s forecasts for key economic indicators like the federal funds rate and Consumer Price Index (CPI) offer statistically significant improvements over traditional methods such as futures contracts and professional forecasts. Unlike these conventional tools, Kalshi provides continuously updated, full distributions of data rather than single-point estimates, offering policymakers and researchers a more dynamic and comprehensive view of economic trends. One of the key strengths of prediction markets is their ability to incorporate insights from retail investors, setting them apart from institution-dominated markets. This inclusion of diverse participants allows for unique perspectives and real-time adjustments to changing circumstances. For example, Kalshi predictions have perfectly matched the realized federal funds rate since 2022, a feat not achieved by other methods like surveys or futures. The platform also provides valuable insights into variables such as GDP growth, core inflation, unemployment, and payrolls, where no other market-based distributions currently exist. The study emphasizes that prediction markets fill a critical gap in economic forecasting by offering live updates on topics that are often overlooked by traditional sources. This real-time data can be particularly useful for policymakers who need to make informed decisions quickly. For instance, Kalshi’s ability to predict the federal funds rate with pinpoint accuracy demonstrates its potential as a tool for enhancing monetary policy decision-making. While the paper focuses on Kalashi, it underscores the broader value of prediction markets in economic forecasting. These platforms allow users to trade contracts based on outcomes in diverse

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Originally published on CoinDesk on 2/19/2026