A recent research paper from the U.S. Federal Reserve emphasizes the potential of prediction markets, particularly Kalshi, as a valuable tool for economic policy analysis. The study asserts that Kalshi’s forecasts for key economic indicators outperform traditional methods, offering real-time insights that are critical for policymakers and researchers.
The paper, released on February 19, 2026, indicates that Kalshi’s predictions regarding the federal funds rate and the U.S. Consumer Price Index (CPI) demonstrate statistically significant improvements over conventional fed funds futures and professional forecasts. Unlike these traditional methods, Kalshi provides continuously updated distributions, allowing for a more nuanced understanding of economic trends.
According to the research, prediction markets like Kalshi yield unique insights into various economic variables, including gross domestic product growth, core inflation, unemployment, and payrolls. These variables lack comparable market-based distributions, making Kalshi’s approach particularly valuable.
Notably, the paper highlights that Kalshi’s predictions have accurately matched the realized federal funds rate on the day of each Federal Open Market Committee meeting since 2022, a benchmark that neither surveys nor futures have consistently achieved.
The involvement of retail investors is cited as a key factor that distinguishes prediction markets from those dominated by institutional players. This inclusion is believed to enhance the accuracy and relevance of the forecasts produced by these markets.
In a related context, Minneapolis Federal Reserve President Neel Kashkari has expressed skepticism about cryptocurrencies, labeling them as ‘utterly useless’ compared to the economic potential of artificial intelligence tools. He argues that stablecoins do not provide significant advantages over existing payment systems, such as Venmo, and face considerable technical challenges.
Kashkari’s remarks contrast sharply with the previous administration’s stance, which viewed cryptocurrencies and stablecoins as strategic assets for enhancing the U.S. dollar’s global influence. His comments underscore the ongoing debate regarding the role of digital currencies in the financial landscape.
The Federal Reserve's recent paper underscores the efficacy of prediction markets like Kalshi in providing real-time economic forecasts. The study highlights their potential to outperform traditional forecasting methods, particularly in predicting key economic indicators.