Fed decision in Dec 2026?
Slight lean to Yes: recent Fed commentary supports a gradual hike, and market pricing still favors it. The main counterweight is that the implied probability slipped from about 80% to 74.5% before the meeting.
Analysis
November 6, 2026: Cleveland Fed President Hammack said policy likely needs to stay restrictive and favored smaller adjustments. That aligns with a 25bp hike more than a hold or larger move.
The market already prices a strong chance of a hike, though it eased from roughly 80% to 74.5% on November 5. With Barkin also signaling further increases, the balance still tilts toward Yes, but incoming inflation and jobs data remain decisive.
Arguments
For
- Hammack explicitly preferred smaller restrictive moves.
- Barkin said further rate increases are likely.
Against
- The implied hike probability has recently drifted lower.
- The Fed still has not committed to a December increase.
Key drivers
- Recent Fed remarks lean toward gradual further tightening.
- Market pricing already embeds a high probability of a 25bp hike.
Risk factors
- Soft inflation or labor data could shift the Fed to hold.
- Comments from voting members could weaken the current hike signal.
Scenarios
Best case
If upcoming inflation and labor data stay hot, Yes rises to about 78%.
Most likely
Most likely the Fed hikes 25bps on December 9, with Yes around 67%.
Worst case
If incoming data soften materially before December 9, Yes falls to about 45%.
Outcomes
| Outcome | AI | MKT |
|---|---|---|
| Hike 25bps | 67% | 65% |
| Fed maintains rate | 30% | 36% |
| Cut 25bps | 2% | 2% |
| Cut >25bps | 1% | 1% |
| Hike >25bps | 1% | 1% |
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