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Fed Rate Hike Odds Hit 82% for December as Inflation Rises
Why is the Fed expected to raise rates in December?
Fed rate hike odds for December stood at about 82% on Tuesday, as all 100 economists in a Reuters poll expect a hike after September inflation hit 3.7%.
Key numbers
| Economists expecting December hike | 100 of 100vs fewer than half last month |
|---|---|
| Economists expecting Wednesday hold | 94 of 100rate stays 3.75%–4.00% |
| December hike odds (CME FedWatch) | 82%71% on Oct 26 per CBS; 84–87% in futures per Investing.com |
| September consumer prices | 3.7%vs 3.6% expected |
| US 10-year Treasury yield | 4.986%+0.004 pt (per [5]) |
What happened
Fed rate hike odds for December stood at about 82% on Tuesday, as all 100 economists in a Reuters poll expect a hike after September inflation hit 3.7%. The Federal Reserve (Fed), which sets US borrowing costs, is widely expected to keep its rate at 3.75% to 4.00% on Wednesday, and 94 of the 100 economists polled agree. In last month's poll, fewer than half expected a December hike. Consumer prices rose 3.7% in September from a year earlier, above the 3.6% economists expected. The Fed raised rates in September.
Why it matters
The Federal Reserve's next move matters because its rate sets the price of borrowing across the economy, from mortgages to credit cards to business loans. A December hike would keep borrowing more expensive while inflation of 3.7% remains well above the Fed's 2% goal. Investors are watching Chair Kevin Warsh's Wednesday press conference for clues about whether more hikes will follow.
Who this affects
- MarketbearishMedium impact
- Rate-sensitive stocks and bonds face pressure if hikes continue.
- CompanyneutralMedium impact
- Fed faces pressure to curb 3.7% inflation without overshooting.
- CompetitorsmixedMedium impact
- ECB and Bank of Japan markets also price December hikes.
- IndustrybearishLow impact
- Borrowers face higher costs; savers may earn more.
Federal Reserve vs European Central Bank, Bank of Japan
| Federal Reserve | 3.75%–4.00% | +0.25 pt, Sep 16 | Oct 28 | Hold |
|---|---|---|---|---|
| European Central Bank | 2.50% | +0.25 pt, Sep 16 | Oct 29 | Hold |
| Bank of Japan | 1.25% | +0.25 pt, Sep 18 | Oct 30 | Hold |
As of 2026-10-21
How we got here
Fed raises rates 0.25 percentage point to 3.75%–4.00% in a 12-0 vote.
Reuters poll: all 100 economists expect a December hike; 94 expect an October hold.
CME FedWatch shows 71% odds of a December hike; September inflation at 3.7%.
CME FedWatch odds of a December hike reach about 82%.
What to watch
- Fed rate decision and Chair Warsh press conference; statement wording on future hikes2026-10-28
- ECB and Bank of Japan decisions, with December hikes also being priced2026-10-30
- Fed's December meeting, where economists expect a 0.25 point hike2026-12-09
Educational content only. Not investment advice.
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