Federal Reserve Backs Prediction Markets for Inflation Forecasting Amid Regulatory Challenges

Federal Reserve researchers have endorsed macro-focused prediction markets as effective tools for real-time forecasting of inflation and interest rates, suggesting they surpass traditional measures. According to NS3.AI, these markets offer a more dynamic approach to economic predictions. However, state regulators, particularly in Nevada, are intensifying enforcement actions against certain prediction markets due to concerns over gambling. Industry experts highlight that ongoing regulatory uncertainty may hinder the liquidity and stability required for these markets to reach their full potential as forecasting tools.