Fed decision in Dec 2026?
Leaning No: the latest inflation and labor prints still point toward a 25-bps hike, but the market already prices most of that in. The evidence supports Yes below the 81% market price, not a big move away from it.
Analysis
Nov. 9 inflation and labor data remain strong enough to support a December hike. Headline CPI was 3.7% year over year and payrolls rose 165,000, both consistent with another tightening step.
Still, the market already prices a hike near 80%, and the Fed will see more data before Dec. 9. That keeps the edge modest rather than decisive.
Arguments
For
- Inflation remains above target across headline and core measures.
- Labor-market strength supports another quarter-point increase.
Against
- The market already assigns a high probability to the hike.
- Additional pre-meeting data could still change the Fed's view.
Key drivers
- Elevated inflation keeps pressure on the Fed.
- Strong payroll growth reduces the case for a pause.
Risk factors
- A softer inflation report could quickly shift expectations.
- A weak employment report would favor the hold outcome.
Scenarios
Best case
If the next inflation report is hot (before Dec. 9), Yes rises to about 84%.
Most likely
Most likely the Fed hikes 25 bps, with Yes around 77%.
Worst case
If the next jobs report is weak (before Dec. 9), Yes falls to about 68%.
Outcomes
| Outcome | AI | MKT |
|---|---|---|
| Hike 25bps | 77% | 81% |
| Fed maintains rate | 18% | 20% |
| Cut 25bps | 2% | 2% |
| Cut >25bps | 2% | 1% |
| Hike >25bps | 1% | 1% |
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