Fed rate hike probability rises to 85%

Strong U.S. employment data and inflation remaining above the central bank's target have reinforced expectations of further monetary tightening. According to market pricing reported by Reuters, the probability of a Fed rate hike at its December meeting has risen to approximately 85%. The central bank kept its benchmark interest rate unchanged at 3.75%–4.00% during its October meeting.

Markets are focused on the October Consumer Price Index (CPI) report scheduled for release on November 10. Economists expect monthly headline inflation to rise by 0.3%, while core inflation is forecast to increase by 0.2%. Higher-than-expected price increases could strengthen the view that the Fed needs to maintain a more restrictive monetary policy stance to combat inflation. Conversely, a lower-than-expected reading could prompt markets to reassess the likelihood of a rate hike. The Fed's next interest rate decision is scheduled for December 9.