An interest rate hike is inevitable.
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BITWU
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The sensitive point in this data is that core CPI has landed right on the condition Waller previously cited for a 50 bp hike.
FedWatch data show that the market currently assigns an 87.3% probability to a 25-basis-point rate hike in December and a 12.7% probability to a 50-basis-point hike.
Inflation calls for a rate hike;
financial markets and politicians do not.
Then there’s the timing: high inflation is also pushing up long-term bond yields and the cost of new borrowing. Not cutting rates does not mean the government’s borrowing costs will fall.
There’s another key factor here:
November CPI won’t be released until mid-December, so the FOMC meeting on December 9 won’t have that data. In other words, the Fed will have to decide whether to raise rates by 25 or 50 basis points in an information vacuum.
Put another way, any rebound could be capped before December 9.
FedWatch data show that the market currently assigns an 87.3% probability to a 25-basis-point rate hike in December and a 12.7% probability to a 50-basis-point hike.
Inflation calls for a rate hike;
financial markets and politicians do not.
Then there’s the timing: high inflation is also pushing up long-term bond yields and the cost of new borrowing. Not cutting rates does not mean the government’s borrowing costs will fall.
There’s another key factor here:
November CPI won’t be released until mid-December, so the FOMC meeting on December 9 won’t have that data. In other words, the Fed will have to decide whether to raise rates by 25 or 50 basis points in an information vacuum.
Put another way, any rebound could be capped before December 9.
