Fed Rate Hike in December Looks Certain After Hot Inflation Data

The Federal Reserve is unlikely to cut interest rates in December after October inflation data came in hotter than expected, with consumer prices rising 0.4% and core prices climbing 0.3% for a third straight month. A rate hike is now nearly certain, with the only question being its size. Fed Governor Christopher Waller signaled support for a December hike, including a possible half-point move, given the persistent core inflation. Markets reacted sharply, with Nasdaq-100 futures falling 1.2%, the two-year Treasury yield jumping to nearly 4.7%, and Bitcoin dropping below $73,500. Strong October job growth of 165,000 jobs gives the Fed cover to tighten without fearing economic damage. Friday’s wholesale inflation report is the last major data point before the Fed’s December 9 meeting, and another hot reading could trigger a larger hike. Higher borrowing costs are expected to persist into 2027, though savers benefit from increased yields, and decisive Fed action may ultimately help control inflation long-term.