Another Fed rate hike in 2026?
Leaning Yes: the November 6 jobs report was still firm, with 165,000 payroll gains and unemployment down to 4.1%, which keeps a December hike in play. The market is already near 75.5%, and the fresh labor data nudges it higher.
Analysis
November 6, 2026 brought another solid labor report: payrolls rose 165,000 and unemployment fell to 4.1%, while the Fed’s October 28 decision still said inflation remains elevated. That combination supports the case for a hike sometime before the December 8–9 meeting ends.
The main pushback is that wage growth cooled to 3.1% year over year and unit labor costs fell in Q3, so the inflation impulse from labor looks less alarming. Still, with the market now pricing a high chance of a December move, the balance tilts modestly toward Yes rather than No.
Arguments
For
- Payroll growth of 165,000 and a 4.1% unemployment rate are consistent with a still-resilient economy.
- Market-implied odds around 80% after the jobs report suggest official data are reinforcing a hike expectation.
- The Fed has already kept rates unchanged, so a later move during the remaining window is still straightforward.
Against
- Wage growth slowed to 3.1% year over year, which weakens the argument that labor costs are forcing the Fed’s hand.
- Third-quarter unit labor costs fell 0.7%, cutting against a strong inflation-acceleration narrative.
- If upcoming inflation data are mild, the Fed may prefer to wait rather than hike again.
Key drivers
- The October 2026 employment report was stronger than expected and suggests the labor market can still tolerate tighter policy.
- The Fed’s October statement left the door open by saying inflation remains elevated, so another increase is still a live option.
Risk factors
- The November 10 inflation report could ease pressure if core and headline prices come in soft.
- The December 4 employment report could cool the case for a hike if job growth or unemployment weakens materially.
Scenarios
Best case
If the November 10 inflation report runs hot and the December 4 jobs report stays strong, Yes rises to about 85%.
Most likely
Most likely the Fed keeps a December hike on the table through the December 8–9 meeting, with Yes around 79%.
Worst case
If the November 10 inflation report is soft and the December 4 jobs report cools meaningfully, Yes falls to about 66%.
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