In September, the Fed delivered its first interest rate hike in three years, raising the policy rate by 25 basis points to a range of 3.75% to 4%.
A rate hike is expected at the December meeting, the final one of 2026. Yesterday, Wall Street Journal reporter Nick Timiraos, known as the Fed spokesperson, commented on the newly released inflation data and the Fed’s December rate decision.
The Fed Faces Pressure to Raise Rates Faster and by More!
US inflation data released yesterday, which the Fed considers when setting interest rates, showed that core inflation had risen to 3.7% annualized over the past three months, adding to pressure on the Fed’s rate policy. Markets are almost certain of a December rate hike, but debate centers on whether it will be a single 50-basis-point increase or consecutive 25-basis-point increases.
On FEDWatchtool, markets have priced in a 25-basis-point increase with a probability of 86.5%, and a 50-basis-point increase with a probability of 13.5%.
Fed spokesperson: “Pressure is mounting for larger and faster interest rate hikes.”
Wall Street Journal chief economics reporter Nick Timiraos wrote that Fed officials spent October trying to tamp down market expectations of rapid, consecutive rate hikes, but the latest inflation data has made that effort more difficult.
Timiraos said the inflation data had heightened concerns about renewed inflationary pressure, further reinforcing expectations that the Fed will raise rates at its December 8-9 meeting.
Timiraos said the Fed now has two options: “To continue with its previously planned pace of two to three 25 basis point rate increases; or to move faster, deliberately slowing economic activity and curbing inflation with successive rate hikes or even a single 50 basis point increase.”
Timiraos said recent comments from Fed members suggest the second option has broader support.
Timiraos also said the choice between a single 50-basis-point increase at the December meeting and two consecutive 25-basis-point increases will be a crucial test of the Fed’s policy choices.
While the Fed has made a significant shift, Goldman Sachs has raised its forecast for rate hikes. The firm now expects the Fed to raise rates by 25 basis points twice, in December and March 2027. This is a revision of its previous forecast, which anticipated a hike only in December of this year, and represents an increase in its rate outlook.
Hot Statements from a FED Member!
Speaking to Bloomberg, Chicago Fed President Austan Goolsbee voiced concerns about inflation. He said yesterday’s data showed inflation was higher than expected and stressed the need to bring inflationary pressure under control.
Asked about the possibility of a 50-basis-point hike in December, Goolsbee said it would be inappropriate to rule out options before the meeting. “There’s the biggest table I’ve ever seen in that room, and all options are always on the table,” Goolsbee said.
Goolsbee also emphasized the need to bring inflation back to its target level.
*This is not investment advice.
Source: en.bitcoinsistemi.com. Adapted by NBTC.
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