Probability of 50-basis-point Fed rate hike rises
The likelihood of a 50-basis-point interest rate hike at the Federal Reserve's (Fed) December meeting increased after U.S. inflation data for October exceeded market expectations.
Consumer prices rose by 0.4% month over month, while core inflation increased by 0.3%, fueling expectations of more aggressive monetary tightening. In futures markets, the probability of a 50-basis-point rate increase reached approximately 10–12%, although a 25-basis-point hike remained the baseline scenario.
Federal Reserve Governor Christopher Waller stated that a 50-basis-point rate hike in December should be considered if monthly core inflation reaches 0.3% or higher. The latest inflation reading met that threshold, intensifying discussions about a larger rate increase. Economic indicators released ahead of the Fed's December 8–9 meeting will play a key role in shaping interest rate expectations. A more aggressive rate hike could trigger volatility in the U.S. dollar, Treasury yields, gold, and global equity markets.
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