CPI (All Items) — Impact on Fed Rate Prediction Markets
Headline inflation captures the full cost-of-living picture. Spikes in food and energy can temporarily distort readings, but sustained headline strength pressures the Fed.
+/-
per 1σ surprise
↑ Hawkish
when high vs consensus
Pre-calibration
data points
Release Schedule
Frequency
Monthly
Release time
8:30 AM ET
Delay
~12 days after month end
FRED series
CPIAUCSL
Historical Releases
| Period | Actual | Consensus | Surprise |
|---|---|---|---|
| Aug 2026 | 3.4%YoY | — | — |
| Jul 2026 | 3.3%YoY | — | — |
| Jun 2026 | 3.5%YoY | — | — |
| May 2026 | 4.2%YoY | — | — |
| Apr 2026 | 3.8%YoY | — | — |
| Mar 2026 | 3.3%YoY | — | — |
How CPI (All Items) Moves Fed Rate Prediction Markets
Headline Consumer Price Index — all items including food and energy.
Headline inflation captures the full cost-of-living picture. Spikes in food and energy can temporarily distort readings, but sustained headline strength pressures the Fed.
The Bayesian Sensitivity Model
The model calibrates a sensitivity coefficient for each indicator: how many percentage points the odds at the next FOMC meeting shift toward a hike or a cut per standard deviation of surprise. For CPI, the preliminary coefficient is ±+/- 5–9pp on next-meeting odds. This means ifCPI comes in 1 standard deviation above consensus (hawkish surprise), the model shifts the odds toward a hike by approximately +/- 5–9pp on next-meeting odds.
These coefficients are preliminary until calibrated from at least 20 historical observations of Kalshi price reactions to each release. The calibration uses a regression of (surprise_zscore × sensitivity_coefficient) against observed Kalshi probability changes, cross-validated against CME FedWatch data going back to 2015.
Frequently Asked Questions
How does CPI (All Items) affect the Fed's rate decision?
Headline inflation captures the full cost-of-living picture. Spikes in food and energy can temporarily distort readings, but sustained headline strength pressures the Fed. The Bayesian sensitivity model estimates +/- 5–9pp on next-meeting odds for each standard deviation surprise vs consensus.
When does CPI release?
CPI (All Items) is released ~12 days after month end at 8:30 AM ET. Frequency: Monthly.
Related reading: September 2026 hike — graded — the Fed raised to 3.75–4.00%; what Kalshi, Polymarket and futures priced, and which was closest.
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