Traders betting big on aggressive Federal Reserve interest rate cuts in 2025 might be in for a brutal reality check as soon as next week.

At the upcoming Federal Reserve meeting on Dec. 18, policymakers are expected to signal a more cautious approach, with only three interest rate cuts projected for next year.

The insight came from a Bloomberg survey of economists which showed the Fed's median "dot plot" is likely to forecast a federal funds rate range of 3.5%-3.75% by December 2025, reflecting just three rate cuts.

But traders are betting on a much bolder move.

Data from CFTC-regulated Kalshi, a...