Federal Reserve researchers say prediction markets are a powerful real‑time signal for economic policy — and they point to Kalshi as a leading example. In a paper published Thursday, Fed authors find that Kalshi’s market prices deliver “statistically significant improvements” over traditional indicators such as fed funds futures and professional forecasters. Unlike surveys that give only occasional point estimates, Kalshi provides continuously updated full probability distributions, offering a live view of market expectations. Key findings - Kalshi’s forecasts for the federal funds rate and the U.S. Consumer Price Index improved on the informational content of fed funds futures and professional forecasts. - The markets offer unique coverage for variables that lack market‑based distributions elsewhere — including GDP growth, core inflation, unemployment and payrolls. - Since 2022, Kalshi’s predictions have “perfectly matched the realized federal funds rate by the day of each meeting,” a level of alignment the paper says surveys and futures did not achieve. - The presence of retail participants appears to be an important feature, making prediction markets “distinct from institutionally dominated markets” and likely contributing to their informational value. Why this matters for crypto audiences Prediction markets have clear conceptual overlap with crypto-native forecasting platforms and DAO decision tools. The Fed’s positive assessment of a retail‑heavy prediction market underscores the value of continuous, market‑based probability signals — a function many decentralized protocols aim to provide on‑chain. For traders, builders and policy watchers in crypto, the Fed paper highlights that well‑designed prediction markets can be more than speculative venues: they can be timely, data‑rich inputs into economic forecasting and policy analysis. Read more AI-generated news on: undefined/news

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