What is the Effective Federal Funds Rate (EFFR)?

The Effective Federal Funds Rate (EFFR) is the actual overnight rate at which U.S. banks lend reserve balances to each other. Published daily by the Federal Reserve Bank of New York, it typically trades 8–12 basis points below the Fed's target upper bound. The Fed sets a target range — for example, 3.50%–3.75% — and the EFFR floats within that range, anchored by the Interest on Reserve Balances (IORB) rate.

How are FOMC rate-move probabilities calculated?

Probabilities are derived from CME 30-Day Federal Funds futures (/ZQ). Each contract settles at 100 minus the average EFFR for its delivery month. For months containing an FOMC meeting, a day-weighted decomposition separates the pre-meeting rate (chained forward from the current EFFR) from the implied post-meeting rate. The difference in basis points is then linearly interpolated across 25 bp buckets (>25bp cut, 25bp cut, hold, 25bp hike, >25bp hike) to produce a probability distribution.

What do /ZQ contract symbols mean?

'/ZQ' is the CME Globex symbol for 30-Day Federal Funds futures. The letter after ZQ is the month code (F=Jan, G=Feb, H=Mar, J=Apr, K=May, M=Jun, N=Jul, Q=Aug, U=Sep, V=Oct, X=Nov, Z=Dec), and the two digits are the year. For example, /ZQM26 is the June 2026 contract, which settles at 100 minus the average daily EFFR across all June 2026 business days.

What is a basis point (bp)?

A basis point is one-hundredth of a percentage point (0.01%). The Federal Reserve typically adjusts interest rates in 25 bp increments. A 25 bp cut moves the target from, say, 4.00% to 3.75%. A 50 bp 'jumbo' cut or hike is sometimes called a '>25bp' move in Fed Watch parlance.

What is the pre-meeting rate vs. post-meeting rate?

The pre-meeting rate is the EFFR implied by futures going into a given FOMC meeting — essentially the current rate chained forward from today. The post-meeting rate is the EFFR the market expects after that meeting concludes, derived by day-weighting the contract's implied average against the pre-meeting rate. The difference between post and pre (in basis points) drives the probability distribution.

How often does the FOMC meet?

The Federal Open Market Committee (FOMC) meets 8 times per year on a pre-announced schedule. Each meeting spans two days; the rate decision and statement are released on the second day, typically at 2:00 PM ET. In addition to the scheduled meetings, the Fed can hold emergency unscheduled meetings in times of market stress.

Fed Watch

Current EFFR estimate: 3.670% · Target Upper: 3.75% · Next FOMC: Jun 17, 2026

Upcoming FOMC Meetings — Rate-Move Probabilities

Probabilities derived from Fed Funds futures (/ZQ) using the Fed Watch methodology. Each contract settles at 100 − average EFFR for the contract month. For months containing an FOMC meeting, the implied post-meeting rate is backed out by day-weighting against the pre-meeting rate (chained forward from current EFFR).

>25bp cut 25bp cut Hold 25bp hike >25bp hike

Meeting	Probabilities	Implied Avg EFFR	Pre-Meeting Rate	Post-Meeting Rate	Change	Contract
Jun 17, 2026	42%58%	3.625%	3.670%	3.566%	-10 bp	`/ZQM26`
Jul 29, 2026	72%28%	3.630%	3.566%	3.635%	+7 bp	`/ZQN26`
Sep 16, 2026	83%17%	3.655%	3.635%	3.678%	+4 bp	`/ZQU26`
Oct 28, 2026	87%13%	3.675%	3.678%	3.710%	+3 bp	`/ZQV26`
Dec 9, 2026	70%30%	3.765%	3.710%	3.785%	+8 bp	`/ZQZ26`

Implied EFFR Forward Curve

Implied post-meeting EFFR across upcoming FOMC meetings. Compare the shape against the current rate to see where the market is pricing cuts or hikes.

/ZQ Strip Snapshot

Raw monthly /ZQ Fed Funds futures contracts streamed in real time. Each contract represents a separate calendar month; the implied EFFR is 100 − last price.

Contract	Month	Last	Bid	Ask	Implied EFFR	Volume
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Fed Rate Fair Value Comparison

Compares Kalshi prediction market prices against Fed Watch (/ZQ futures) probabilities. Divergences may indicate mispricing opportunities.

FOMC Meeting:

Kalshi Decision Kalshi Cumulative Fed Watch (/ZQ)

Kalshi vs /ZQ Divergences

Gap threshold:

Contracts where Kalshi's implied probability diverges from Fed Watch (/ZQ) by more than the threshold. Each row is a directional trade idea: buy the side Kalshi under-prices. EV uses /ZQ's probability as fair value. Sorted by return on capital.

Meeting	Outcome	Action	Kalshi Yes	/ZQ Fair	Gap	Cost	EV / $ cap	Ticker
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This is a signal, not a guarantee. /ZQ is deeper and usually smarter, but large gaps can reflect liquidity, resolution-criteria differences, or events /ZQ can't price (e.g. emergency cuts).

How This Tool Works

Fed Watch Methodology

This tool replicates the CME FedWatch methodology using live 30-Day Federal Funds futures (/ZQ) streamed from CME Globex. Each futures contract settles at 100 minus the average daily EFFR across all calendar days in its delivery month.

For a month that contains an FOMC meeting, the month's implied average is a blend of two rates: the rate before the meeting and the rate after. Day-weighting separates them:

                                            implied_avg = (N/D) × pre_rate + ((D−N)/D) × post_rate
                                        

where N = days before/on meeting day, D = total days in month.

The implied change in basis points (post − pre) is then linearly interpolated across 25 bp buckets to produce the probability distribution shown in the table.

What Is the EFFR?

Effective Federal Funds Rate

The Effective Federal Funds Rate (EFFR) is the actual volume-weighted median rate at which U.S. depository institutions lend overnight reserve balances to one another. It is published each business day by the Federal Reserve Bank of New York.

The Fed does not set the EFFR directly — it sets a target range (e.g., 3.50%–3.75%) and uses open-market operations and the Interest on Reserve Balances (IORB) rate to keep the EFFR inside that range.

In practice, the EFFR trades roughly 8–12 bp below the target upper bound. This tool estimates it as:

                                            EFFR ≈ target_upper − 0.08%
                                        

All rate calculations on this page are denominated in the EFFR, not the target range midpoint.

Reading the Probability Table

Column Definitions

Meeting: The second day of the FOMC meeting, when the rate decision is announced (typically 2:00 PM ET).
Contract: The /ZQ futures contract whose settlement month contains the meeting. Hover for a tooltip; see below for symbol decoding.
Implied Avg EFFR: The average EFFR implied by the contract price for that entire calendar month (100 − price).
Pre-Meeting Rate: The EFFR expected going into the meeting, chained forward from the current EFFR using earlier meetings.
Post-Meeting Rate: The EFFR the futures market implies after the decision — backed out via day-weighting.
Change: Post minus pre, in basis points. Green = cut priced in; red = hike; gray = effectively flat.
Probabilities: Stacked bar showing the market-implied probability for each outcome bucket. Hover for labeled values.

Understanding /ZQ Contract Symbols

30-Day Federal Funds Futures

/ZQ is the CME Globex ticker for 30-Day Federal Funds futures. Each contract covers one calendar month and cash-settles at 100 − arithmetic mean daily EFFR for that month.

The letter after /ZQ is the month code, and the two digits are the year:

Code	Month	Code	Month	Code	Month
`F`	January	`G`	February	`H`	March
`J`	April	`K`	May	`M`	June
`N`	July	`Q`	August	`U`	September
`V`	October	`X`	November	`Z`	December

Example: /ZQM26 = June 2026 contract. It settles at 100 − avg(daily EFFR across all June 2026 business days).

Contract prices are streamed live from CME Globex via Schwab during trading hours. Outside market hours the strip reflects the prior close.

About the Federal Open Market Committee (FOMC)

What Is the FOMC?

The Federal Open Market Committee is the monetary policy body of the U.S. Federal Reserve. It consists of the 7 members of the Board of Governors plus 5 of the 12 regional Federal Reserve Bank presidents (on a rotating basis, except New York which holds a permanent seat).

The FOMC meets 8 times per year on a pre-announced schedule. Rate decisions are announced at 2:00 PM ET on the second day of each meeting, followed by a press conference with the Fed Chair.

What Is a Basis Point?

A basis point (bp) is one one-hundredth of a percentage point — 0.01%. The Fed typically moves rates in 25 bp increments. A 25 bp cut from 3.75% brings the target to 3.50%.

A 50 bp move (called a "jumbo" cut or hike) signals unusual urgency. Moves larger than 50 bp are historically rare outside emergency conditions.

On this page, >25bp cut/hike means the market is pricing a move larger than one standard increment.

Why Watch Futures?

Fed Funds futures represent real money bets on where overnight rates will land. Because they settle against the actual realized EFFR, large institutional traders — who have the most information — put capital behind their rate views.

The implied probabilities are therefore a market consensus forecast, not a survey or model. They update continuously as new economic data, Fed communications, and geopolitical events shift expectations.

Probabilities are refreshed every 30 seconds during market hours. The /ZQ strip updates every 5 seconds.