Futures Pricing Puts Odds of a December U.S. Rate Hike at 100%
Key Facts
The probability of the Federal Reserve raising interest rates in December reached 100% in a snapshot of futures prices at the close on November 12, according to data published by CDES, a shift from the 90% reading cited in an Associated Press report the previous day. The percentages reflect traders’ pricing of the contracts and do not represent a central bank decision or an official consensus on a hike. The November 11 reading was tied to the meeting scheduled for December 8 and 9, according to the same report. CME Group says its FedWatch tool uses prices of 30-day federal funds futures to estimate the probabilities of meeting outcomes. The 100% reading therefore reflects market pricing at a specific moment and can change as those contract prices move.
The rise in bets followed October’s inflation report, which showed the U.S. seasonally adjusted Consumer Price Index rose 0.4% for the month, compared with a 0.6% increase in September, according to the Bureau of Labor Statistics. The core index, which excludes food and energy, rose 0.3% in October, the same monthly increase recorded in both August and September. Philadelphia Fed President Anna Paulson said that “core inflation is above target and has not come down.” She added that its continued elevation means pressures are not limited to factors that will fade on their own, while supporting only gradual increases. The monthly reading provides details on the pace of inflation, while an annual comparison for October 2026 is not available in the relevant series.
Among the index components, the shelter index rose 0.3% in October and accounted for more than 30% of the monthly increase in the all-items index, according to the Bureau of Labor Statistics. The energy index increased 0.7% during the month, after rising 5.2% in September, while the food index climbed 0.5%. The figures show how component growth rates differ from month to month: energy rose more slowly in October than in the previous month, while shelter remained a notable contributor to the overall increase. Paulson said core inflation remained above target, keeping the interest-rate debate tied to how persistent the pressures prove to be. In remarks reported by the Associated Press, Dallas Fed President Lorie Logan said she had supported two additional increases, each by a quarter point.
In the cryptocurrency market, EL7 data show Bitcoin’s close fell from $76,088.01 on November 5 to $74,015.19 on November 11. The token closed at $73,796.06 on November 10 before rising to $74,015.19 in the following session. These closing prices place the move in the context of the days before the 100% reading published at the close on November 12. An Associated Press report on November 11 had said investors priced in a 90% probability of a December rate hike. In an earlier report on the November 10 session, the Associated Press linked rising bets on a rate hike to declines in U.S. stocks and an increase in the 10-year Treasury yield to 4.99% from 4.88% late in the previous session.
Attention is turning to the Federal Open Market Committee meeting on December 8 and 9, with a press conference scheduled for December 9, according to the Federal Reserve’s official calendar. In an Associated Press report published on November 11, market bets on a second increase in January rose to more than 64%, after tripling between Monday and Tuesday. The Federal Reserve had held rates unchanged at about 3.9% at its late-October meeting, according to the report. The Bureau of Labor Statistics is scheduled to release the November Consumer Price Index report on December 10 at 8:30 a.m. Eastern time. The inflation release is scheduled for the day after the December meeting, making it the latest subsequent monthly reading on the announced calendar.