Fed decisions (Sep–Dec)
Leaning Yes: the sequence is already two-thirds complete, and the fresh November 6 labor data plus a 4.1% year-end median rate point toward a December hike.
Analysis
November 6, 2026 labor data showed 165,000 October payroll gains and unemployment at 4.1%, while market pricing for a December hike stayed around 78%. That keeps the last step of the required Hike–Pause–Hike path alive and still favored.
The Fed has already delivered the September hike and October pause, and the October statement left the door open by emphasizing more data was needed. With inflation still elevated and the September projections implying a 4.1% year-end median, the main risk is not whether the path fits, but whether December data are soft enough to justify a hold instead.
Arguments
For
- The November 6 jobs report was solid enough to support another tightening step in December.
- The September projections and several analyst expectations both point to one more increase before year-end.
Against
- The October meeting vote was not unanimous, showing there is still some internal resistance to further tightening.
- Williams stressed waiting for additional information, so the Fed could decide a pause is safer than forcing a hike.
Key drivers
- The first two required legs already happened, so only a December 8–9 hike is needed to complete the market’s sequence.
- Recent data and Fed rhetoric lean restrictive: payrolls beat expectations, inflation remains elevated, and the year-end median rate projection is 4.1%.
Risk factors
- The October statement avoided firm forward guidance, which leaves room for the Fed to pause if officials want more confirmation.
- A weak inflation or activity reading before December could shift the committee toward keeping rates unchanged, which would break the sequence.
Scenarios
Best case
If the December 8–9 FOMC statement delivers a 25-basis-point hike, Yes rises to about 95%.
Most likely
Most likely the Fed hikes again on December 8–9, leaving Yes around 85%.
Worst case
If the December 8–9 meeting is a pause, Yes falls to about 0% because the required final leg fails.
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