Fed Researchers Suggest Kalshi Data for Policy Insights

Researchers from the U.S. Federal Reserve System have suggested that data from the prediction market platform Kalshi could enhance the Fed’s policy decision-making. In a paper published on February 12, Federal Reserve Chief Economist Anthony Diercks, Research Assistant Jared Dean Katz, and researcher Jonathan Wright from Johns Hopkins University argue that Kalshi’s data offers high-frequency, continuously updated probability distributions that reflect macroeconomic expectations more promptly than traditional surveys.

The study found that Kalshi’s data reacts swiftly to major policy statements and economic data releases, providing valuable insights into risk-neutral probabilities of macroeconomic indicators like interest rate decisions. Despite these findings, the researchers clarified that their paper is an internal discussion document and does not represent an official policy stance of the Federal Reserve.