Federal Reserve Researchers Say Kalshi Data Can Provide Real-Time Policy Guidance

A paper by three Federal Reserve researchers states that data from the prediction market platform Kalshi can more promptly reflect macroeconomic expectations and should be incorporated into the Fed's decision-making framework. These data respond quickly after major policy announcements and economic data releases, but the paper does not represent an official policy stance.

Odaily Planet Daily reports: On February 12, three researchers from the Federal Reserve System published a paper indicating that data from the prediction market platform Kalshi can more immediately reflect macroeconomic expectations and should be included in the Fed's decision-making reference framework. The authors include Federal Reserve Chief Economist Anthony Diercks, research assistant Jared Dean Katz, and Johns Hopkins University researcher Jonathan Wright.

The study compares Kalshi data with traditional surveys and market-implied expectations, suggesting that Kalshi can provide high-frequency, continuously updated probability distributions used to measure risk-neutral probabilities of macro indicators such as interest rate decisions. The researchers note that Kalshi reacts more swiftly after major policy statements or economic data releases.

However, the report emphasizes that the Fed research paper is an internal discussion document and does not represent an official policy position. (Cointelegraph)