Intrade sells fed OMC rate binary options. I think if the market was more liquid, it would absolutely get used to hedge interest rate risks, and as people tend to be long bonds and short rates as a result, there might be a bias towards predicting higher rates as people want the protection. But the total holdings and the degree of hedging would be very opaque. Policy prediction markets could have similar problems.
Intrade sells fed OMC rate binary options. I think if the market was more liquid, it would absolutely get used to hedge interest rate risks, and as people tend to be long bonds and short rates as a result, there might be a bias towards predicting higher rates as people want the protection. But the total holdings and the degree of hedging would be very opaque. Policy prediction markets could have similar problems.