**[Federal Reserve Research: Prediction Market Kalshi May Become a Superior Tool for Measuring Macro Expectations]** BlockBeats News, February 19 — Three researchers from the U.S. Federal Reserve Board believe that the prediction market Kalshi is superior to existing tools in real-time measurement of macroeconomic expectations and should be incorporated into the Federal Reserve's decision-making process. The research report, titled *"The Rise of Kalshi and Macro Markets,"* was published on February 12 and authored by Federal Reserve Board Chief Economist Anthony Diercks, Federal Reserve Research Assistant Jared Dean Katz, and Johns Hopkins University Research Assistant Jonathan Wright. The study compares Kalshi's data with traditional surveys and market-implied forecasts to examine how market expectations of future economic outcomes change in response to macroeconomic news and policymakers' statements. "Managing expectations is at the core of modern macroeconomic policy. However, the tools we typically rely on—surveys and financial derivatives—have many shortcomings," the researchers stated, adding that Kalshi can "directly and in real-time" capture the market's "beliefs." "Kalshi markets provide a high-frequency, continuously updated, and information-rich benchmark that is valuable for both researchers and policymakers." "Overall, we believe Kalshi should be used to provide risk-neutral [probability density functions] regarding Federal Open Market Committee decisions at specific meetings," they argued, noting that the current benchmarks are "too far removed from monetary policy rate decisions." However, the Federal Reserve's research paper is merely "preliminary material distributed to stimulate discussion" and will not influence the central bank's decisions. The Federal Reserve pointed out that one advantage of Kalshi in examining macroeconomic expectations is its "rich intraday dynamics." The researchers stated: "These probabilities respond quickly and reasonably to major developments." For example, they noted that after Federal Reserve Governors Christopher Waller and Michelle Bowman delivered speeches, the implied probability of a rate cut in July rose to 25%, but later declined following a stronger-than-expected June employment report. The researchers added: "Kalshi provides the fastest-updating distributions currently available for many key macroeconomic indicators."