PomegraFed Half-Point Hike Odds Rise to 13.5% Before Warsh Speech
Will the Fed hike rates by 50 basis points in December?
The Fed's December half-point rate-hike odds rose to 13.5% by Monday from near zero, after hot October inflation met Governor Waller's bar, while a quarter-point hike is fully priced.
Key numbers
| October CPI (monthly) | +0.4%vs +0.3% expected |
|---|---|
| Core CPI (monthly) | +0.3%vs +0.2% expected; third straight month |
| Fed funds range | 3.75%–4.00%unchanged since Sept 16 |
| 50bp December hike odds | 13.5%up from near zero |
| Quarter-point December hike | Fully pricedper futures markets |
What happened
The Fed's December half-point rate-hike odds rose to 13.5% by Monday from near zero, after hot October inflation met Governor Waller's bar, while a quarter-point hike is fully priced. Consumer prices rose 0.4% in October versus the 0.3% expected, and core prices (which leave out food and energy) rose 0.3%. Waller had said a core reading of 0.3% would make him consider a half-point hike rather than a quarter-point one. Fed Chair Kevin Warsh speaks at noon Eastern today, and the talk is expected to focus on AI and jobs, not rate signals.
Why it matters
The Federal Reserve is on track to raise borrowing costs again in December, and the open question is by how much. A half-point hike would be twice the size of the quarter-point step markets now expect, making loans costlier faster. It would also show the Fed sees inflation as a bigger threat. Bond yields (the interest the government pays to borrow) have already jumped.
Who this affects
- MarketbearishMedium impact
- Higher rates pressure stocks and bonds; yields already jumped.
- CompanyneutralMedium impact
- Fed faces pressure to hike harder to prove resolve.
- CompetitorsneutralLow impact
- Other central banks, like the Bank of England, are also tightening.
- IndustrybearishMedium impact
- Borrowers face costlier loans; savers may earn more.
Federal Reserve vs Bank of England, ECB, Bank of Japan
| Federal Reserve— | 3.75%–4.00% | Hike, Sept 16 | Yes (25bp) |
|---|---|---|---|
| Bank of England— | 4.00% | +0.25pt hike, Nov 4 | — |
| European Central Bank— | 2.50% | Hold, Oct 29 | — |
| Bank of Japan— | 1.25% | Hold, Oct 30 | — |
As of 2026-11-16
How we got here
Fed rate range set at 3.75%–4.00%, where it has stayed since.
Bank of England raises Bank Rate a quarter-point to 4% in an 8–1 vote.
Waller says half-point hike 'should be considered' if core CPI hits 0.3%; it does.
Logan says Fed may move more rapidly; 2-year yield posts biggest jump since April 2025.
Warsh opens San Francisco Fed conference on productivity and jobs at 12:00 ET.
What to watch
- Warsh's remarks: any hint on December hike size, despite his dislike of forward guidance.2026-11-16
- FOMC minutes from the October 27–28 meeting, due 2:00 p.m. ET.2026-11-18
- Fed's December 8–9 meeting: quarter-point versus half-point hike decision.2026-12-09
Educational content only. Not investment advice.
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