Short Answer

The Federal Reserve is expected to raise interest rates by 25 basis points in December, an outcome priced by the market at 86.0%.

1. Market Behavior & Drivers

Recent market movement reflects shifting expectations around Federal Reserve policy, with the largest moves driven by hawkish signals from the Fed itself. The 14.9 percentage point drop in the "No change" contract on November 10 followed hawkish Fed communications and economic data that strengthened expectations for a rate hike. A similar dynamic drove the 13.0 point drop on November 6, which was part of a sustained market repricing toward a December hike.
Political intervention appears to have caused the main counter-movement. On November 5, President Trump posted on Truth Social demanding lower rates and threatening to "STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT" if his demands were not met. This likely drove the 12.0 point spike in the "No change" contract as traders priced in a political dilemma for Fed Chair Kevin Warsh. The context for an earlier 8.0 point spike on October 29 indicates a contradiction with market fundamentals; it states that following a press conference by Chair Warsh, the implied probability of a rate hike actually rose, which should have pushed the "No change" probability down.
  • A 25 bps increase aligns with the SEP 'dot plot' and unanimous Reuters economist forecasts.
  • A 50 bps hike gained traction after October core CPI met Governor Waller's condition.

Who Wins and Why

Outcome Market Model Why
25 bps increase 86.0% 86.1% The Fed's SEP dot plot and a Reuters poll unanimously project a 25 bps hike.
No change 3.7% 2.0% A Reuters poll unanimously forecasts a 25 bps hike, and Fed Chair Warsh maintains a hawkish stance.
50+ bps increase 10.6% 11.2% Fed Governor Waller suggested a 50 bps hike after October core CPI printed at 0.3%.
25 bps decrease 0.3% 0.4% Fed Chair Warsh's hawkish stance and strong GDP growth argue against any rate cuts.
50+ bps decrease 0.3% 0.4% PCE inflation is projected to remain high, and strong GDP growth does not support rate reductions.

Current Context

Markets widely anticipate a 25bp hike at the December FOMC meeting. As of November 10, 2026, prediction markets show high probabilities for a 25bp increase at the December 9 meeting: Kalshi indicates an 86% chance, with Polymarket at 84.5% [1][2][3]. CME FedWatch and 30-day Fed Funds futures price an 87% probability for a 25bp hike and 13% for a larger move, implying an expected Effective Fed Funds Rate (EFFR) of 4.162% [4][5]. A Reuters poll of 101 economists conducted November 6-10, 2026, unanimously forecasts a 25bp increase, bringing the range to 4.00%-4.25% [6]. Approximately 55% of these economists expect this December hike to conclude the current tightening cycle [6]. The FOMC held rates at 3.75%-4.00% in a 10-2 vote on October 28, 2026, with two members favoring a 25bp increase; the upcoming December meeting includes economic projections [7][8][4].
Strong economic data and hawkish Fed commentary support further tightening. The probability of a hike exceeding 25bp rose from 0% to 11% after the October CPI print of 0.4%, which exceeded the 0.3% consensus [5]. Fed Chair Kevin Warsh, sworn in May 2026, noted at his October 28 press conference that inflation has been above the 2% target for nearly six years, and GDP growth was revised up to 2.4% for H1 2026, with Q3 likely above 3% [8][9]. Warsh had previously initiated the first hike in three years, raising rates 25bp in September 2026 to 3.75%-4.00% [8][10][11][9]. Fed Governor Christopher Waller stated on November 10, 2026, he is "leaning toward" a December rate increase even with softer inflation data, and would back "more robust action" if readings come in higher than forecast [12][5]. The September 2026 Summary of Economic Projections (SEP) showed a hawkish shift, with the median fed funds rate for end-2026 revised to 4.1% from 3.8% in June, and PCE inflation for 2026 raised to 3.7% [13][14]. Twelve of 18 FOMC members projected at least one more hike by end-2026 [13]. Globally, central banks are tightening synchronously, including the ECB, Bank of Japan, RBA, and Bank of Canada [11][15][16][17][18].
Geopolitical factors, AI investment, and political pressure also influence the outlook. Fed Chair Warsh attributes rising bond yields, with the 10-year Treasury yield approaching 4.9% and 30-year yields reaching a 20-year high of 5.2% before the December meeting, to economic strength, surging capital expenditures (particularly AI/hyperscaler investment), and geopolitical factors, rather than direct inflation worries or US deficit concerns [5][10][19]. Warsh views AI as 'probably the most consequential change' in his lifetime and cited AI-driven capital expenditure as a key factor in higher inflation and bond yields [9][20][21][22]. He established five task forces in June 2026, including one focused on AI/productivity/employment [9][23]. At his October 28 press conference, Warsh acknowledged tighter financial and credit conditions for some businesses and households since September, but stated, "I'm unwilling and unable to call [financial conditions] tight" [8][16]. President Trump publicly criticized the September hike, demanding rates below 1% and attempting to remove Fed Governor Lisa Cook [24][25][26][27]. Kalshi odds of Trump criticizing Warsh publicly before year-end rose to 66% after the September FOMC decision [24][27]. Important economic releases ahead of the December 9 FOMC decision include November PPI (Nov 13), Retail Sales (Nov 17), PCE and GDP (Nov 25), and December NFP (Dec 4) [28][29][30][31]. J.P. Morgan Global Research projects a quarter-point increase in December but does not foresee a prolonged hiking cycle [32].
Sources (32)
  1. 1Fed Rate Odds: 86% Chance of a 25bp Hike in December | Kalshikalshi.com
  2. 2Fed decision in Dec 2026? Odds, Platforms, and Market Data | The Prediction Marketsthepredictionmarkets.com
  3. 3Fed Decision in December?quiverquant.com
  4. 4December 2026 FOMC Meeting: Rate Probabilities | Frenzy Capitalfrenzycap.com
  5. 5Market spooked because now the Fed may need a supersized hike in Decembercnbc.com
  6. 6Fed to raise rates once more in December as inflation risks stay high: Reuters poll By Reutersinvesting.com
  7. 7The Fed paused in October, but expectations for a December rate increase remained largely unchanged. | Chatham Financiallinkedin.com
  8. 8Transcript of Chairman Warsh’s Press Conference, October 28, 2026federalreserve.gov
  9. 9Fed chair Warsh pledges price stability but avoids hints about rates | AP Newsapnews.com
  10. 10Fed's Warsh lays out forces driving up bond yields | Reutersreuters.com
  11. 11Fed's Warsh surprised by world economy's 'resilience'finance.yahoo.com
  12. 12Fed Governor Waller sees December hike likelycnbc.com
  13. 13MNI US Macro Weekly: Higher For Longer - 09-18-2026 | MNImnimarkets.com
  14. 14FOMC SEP Monitor | Yardeni Researchyardeni.com
  15. 15Central Bank Divergence: ECB Hiking, Fed on Hold, BoJ Normalising — What It Means for Your Portfolio – Riviera Wealth Managementrivierawealthmanagement.com
  16. 16Interest Rates Forecast 2026–2027: When Will Rates Go Down?naga.com
  17. 17“Agricultural and Energy Prices Sound Alarm” Rate-Hike Case Gains Ground Across U.S., Europe and Japan as Extreme Weather and Wars Fuel Inflation | News — The Economyeconomy.ac
  18. 18Interest Rates Forecast 2026–2027: When Will Rates Go Down?naga.com
  19. 19Kevin Warsh’s Midterm Dilemma | IEP@BUiep.unibocconi.eu
  20. 20Kevin Warsh holds first news conference as Federal Reserve chair – watch liveyoutube.com
  21. 21How Kevin Warsh has set out to remake the Fed - LA Times Nowlatimesnow.com
  22. 22Kevin Warsh news and analysis articles - Central Bankingcentralbanking.com
  23. 23Fed holds rates; Warsh announces 5 task forcesazzet.com
  24. 24Trump Avoids Direct Clash With Warsh, but Another October Rate Increase Could Deepen Riften.bloomingbit.io
  25. 25Trump reopens Fed battle at critical time for bond markets - The Globe and Mailtheglobeandmail.com
  26. 26Fed’s Warsh on Collision Course With Trump as Rate Hike Loomsnews.bgov.com
  27. 27The politics of the Fed's first rate hike in three yearsainvest.com
  28. 28US Personal Income and Outlays (PCE): November 2026 — Wednesday, 23 December 2026 | Finance Calendarfinancecalendar.com
  29. 29Macro Calendar – CPI, NFP and Fed Meeting Datesterminal.kryptomagazin.cz
  30. 30Sunday Monday Tuesday Wednesday Thursday Friday Saturdayinvestech.com
  31. 31September 2026investech.com
  32. 32What’s The Fed’s Next Move? | J.P. Morgan Global Researchjpmorgan.com

2. Price Chart

Historical Price (Probability)

Outcome probability
Date

3. Significant Price Movements

Notable price changes detected in the chart, along with research into what caused each movement.

Outcome: No change

📉 November 10, 2026: 14.9pp drop

Price decreased from 18.5% to 3.5%

What happened: The 14.9 percentage point drop in the "No change" outcome for the December Fed decision on November 10, 2026, was primarily driven by strengthening expectations for a rate hike, stemming from recent Federal Reserve hawkish signals and economic data. The October 28, 2026 FOMC meeting, where two members dissented in favor of a 25bp hike and Chairman Warsh highlighted elevated inflation and strong growth, strongly signaled further tightening [1][2]. This stance was further reinforced by "recent inflation data exceeding consensus and resilient labor market readings" that increased market conviction for a December rate hike [3]. Social media was irrelevant to this movement, as earlier posts from figures like Donald Trump advocated for rate cuts, directly opposing the observed market shift towards a hike [4][5].

📉 November 06, 2026: 13.0pp drop

Price decreased from 34.5% to 21.5%

What happened: The 13.0 percentage point drop in the "No change" outcome on November 06, 2026, was primarily driven by a continuing market repricing of hawkish Federal Reserve expectations, rather than a single distinct event on that day. This reflected a sustained trend of increasing probabilities for a December rate hike, fueled by persistent inflation, strong US economic growth, and an improving labor market [6]. The Federal Reserve's October 28, 2026 decision to hold rates but with two dissenting votes for a hike likely contributed to this sustained repricing by signaling a hawkish bias [1]. Social media activity was irrelevant as a primary driver.

📈 October 29, 2026: 8.0pp spike

Price increased from 17.5% to 25.5%

What happened: The provided web research contradicts the stated market movement. On October 29, 2026, the probability of "no change" for the Fed's December decision should have decreased, not spiked. Following Fed Chair Warsh's October 28 press conference, the market-implied probability of a December rate hike rose from 78% to 85%, indicating a ~7 percentage point decrease in "no change" expectations [7][8]. No social media activity was identified that would explain an upward spike in "no change" probability on this date. Social media was irrelevant to this contradictory event.

Outcome: 25 bps increase

📉 November 05, 2026: 14.0pp drop

Price decreased from 77.5% to 63.5%

What happened: President Trump's posts on Truth Social, threatening to "STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT" if the Fed did not lower rates, likely served as the primary driver of this market movement [9]. These statements, creating a political dilemma for Fed Chair Kevin Warsh who was expected to hike rates in December, introduced significant uncertainty regarding the Fed's policy independence [9]. This social media activity likely coincided with or immediately preceded the November 05, 2026 price movement, causing the market's confidence in a 25 basis point increase to drop by 14.0 percentage points as investors considered the heightened political pressure on the Fed. Social media was a primary driver of this market movement.
Sources (9)
  1. 1Federal Reserve Board - Federal Reserve issues FOMC statementfederalreserve.gov
  2. 2Transcript of Chairman Warsh's Press Conference -- October 28, 2026federalreserve.gov
  3. 3Global Rates Prediction Markets: Live Odds | Lines.comlines.com
  4. 4Strong job gains signal Fed hike as Trump levels new rate-cut demand | Reutersreuters.com
  5. 5Trump backs Warsh, blames Fed board for rate hike - Insurance News | InsuranceNewsNetinsurancenewsnet.com
  6. 6Fed Rate Odds: 86% Chance of a 25bp Hike in December | Kalshikalshi.com
  7. 7MAC Desk Weekly Recape.nyse.com
  8. 8Fed Chair Kevin Warsh is keeping Wall Street guessing. It may be his most powerful tool. --analysiscnbc.com
  9. 9Trump's baffling Fed threat could be gift to Warsh | Awani Internationalinternational.astroawani.com

4. Market Data

Contract Snapshot

This market resolves based on the change in the upper bound of the target federal funds rate, in basis points, following the Federal Reserve's December 8-9, 2026 FOMC meeting compared to its prior level. Any rate change not among the specified options will be rounded up to the nearest 25 basis points (e.g., 12.5 bps is considered 25 bps). Resolution is based on the FOMC's official statement, and if no statement is released by the end date of the next scheduled meeting, the market defaults to the "No change" outcome.

Available Contracts

Market options and current pricing

Outcome bucket Yes (price) No (price) Last trade probability
25 bps increase $0.86 $0.15 86%
50+ bps increase $0.11 $0.89 11%
No change $0.04 $0.96 4%
25 bps decrease $0.00 $1.00 0%
50+ bps decrease $0.00 $1.00 0%

Market Discussion

The market discussion shows a strong consensus for a 25 basis point federal funds rate increase at the December FOMC meeting, with an 86% implied probability, driven by persistent inflation and resilient economic growth. Arguments for this modest tightening are supported by steady employment gains and wage pressures, while the low probabilities for no change or cuts align with official guidance for gradual normalization. A 50+ basis point increase, though considered rare by some traders, remains a tail risk at 11%, capturing possibilities of hotter-than-expected economic readings.

5. Trust Index

Octagon Trust Index Polymarket 58 Caution

Official decision: one office decides and holds the answer before the public

Integrity risk· Information exposure

How it adds up
Integrity80% of score54Caution
Trade quality20% of score72Good

Includes the cost to trade: a $10,000 order can't be filled here because the order book is too thin.

Trust score58Caution

Weighted blend with hard caps — a critically weak safety pillar, or a severe trading anomaly, caps the total regardless of the rest. Full methodology · About the Trust Index

Trust profile
Integrity2 screens run · 2 don't apply · 6 awaiting data
Market integrity
74Good

Outcome is hard to influence

Outcome controlStructural risk · high confidence

Settlement is decided by a token-holder vote.

4 screens not run
Thin-leg conviction · doesn't apply to this market type
Large trades · data source not connected
Thin-volume moves · data source not connected
Size patterns · data source not connected
Info fairness
30High Risk
Information exposureStructural risk · medium confidence

Official decision: one office decides and holds the answer before the public

4 screens not run
Move vs. catalyst · data source not connected
Longshot repricing · data source not connected
Pre-broadcast certainty · doesn't apply to this market type
Cross-venue timing · data source not connected
Resolution quality
60Caution

Settlement depends on token voting

No suspicious activity on any screen

Resolution rules read: Clear

Settlement is decided by a token-holder vote.

Liquidity
71Tradeable

Fills fine at modest size

5 contracts · worst first

50+ bps increase65
Tradeable · low confidence

Scored from 24h activity alone — realized cost unmeasurable (capped at 65)

No change65
Tradeable · low confidence

Scored from 24h activity alone — realized cost unmeasurable (capped at 65)

50+ bps decrease65
Tradeable · low confidence

Light recent trading — size may not fill near the screen price.

25 bps decrease65
Tradeable · low confidence

Scored from 24h activity alone — realized cost unmeasurable (capped at 65)

25 bps increase91
Deep · high confidence

Quoted spread 1.2% of price with size at both touches

Move quality
70Stable

No significant moves

5 contracts · worst first

25 bps increase—
No significant move (6h)

Price was stable over the last 6 hours.

50+ bps increase—
No significant move (6h)

Price was stable over the last 6 hours.

No change—
No significant move (6h)

Price was stable over the last 6 hours.

50+ bps decrease—
No significant move (6h)

Price was stable over the last 6 hours.

25 bps decrease—
No significant move (6h)

Price was stable over the last 6 hours.

Rule clarity
95Clear

Counts toward Resolution quality, not here

5 contracts · worst first

25 bps increase95
Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
50+ bps increase95
Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
No change95
Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
50+ bps decrease95
Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
25 bps decrease95
Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
Trade quality
72Good

Order book supports trading

Deep and tight enough to trade efficiently.

Outcome quality 72 (notional-weighted across 5 scored legs)

$100 order: 0.0c slippage (<1% of a 4c contract)

$1,000 order: 0.0c slippage (<1% of a 4c contract)

$10,000 order: book too thin to fill

25 bps increase91Market scoreLiquidity91Move quality–Rule clarity95
Why 91
Liquidity
91 · Deep · high confidence

Quoted spread 1.2% of price with size at both touches

Move quality
No significant move (6h)

Price was stable over the last 6 hours.

Rule clarity
95 · Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
50+ bps increase65Market scoreLiquidity65Move quality–Rule clarity95
Why 65
Liquidity
65 · Tradeable · low confidence

Scored from 24h activity alone — realized cost unmeasurable (capped at 65)

Move quality
No significant move (6h)

Price was stable over the last 6 hours.

Rule clarity
95 · Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
No changePrimary65Market scoreLiquidity65Move quality–Rule clarity95
Why 65
Liquidity
65 · Tradeable · low confidence

Scored from 24h activity alone — realized cost unmeasurable (capped at 65)

Move quality
No significant move (6h)

Price was stable over the last 6 hours.

Rule clarity
95 · Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
50+ bps decrease65Market scoreLiquidity65Move quality–Rule clarity95
Why 65
Liquidity
65 · Tradeable · low confidence

Light recent trading — size may not fill near the screen price.

Move quality
No significant move (6h)

Price was stable over the last 6 hours.

Rule clarity
95 · Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear
25 bps decrease65Market scoreLiquidity65Move quality–Rule clarity95
Why 65
Liquidity
65 · Tradeable · low confidence

Scored from 24h activity alone — realized cost unmeasurable (capped at 65)

Move quality
No significant move (6h)

Price was stable over the last 6 hours.

Rule clarity
95 · Clear · high confidence

Objective result from a trusted source (allowlist)

allowlist · Clear

underwriting_v1.4 · computed Nov 11, 2026

6. What specific inflation or employment data before the December 9 meeting could push the FOMC to hike by 50 basis points instead of the expected 25?

October Core CPI0.3% (met Waller's condition) [1][2][3]
October Jobs Report Payroll Gains165,000 [2][3][4][5]
Next Key Data ReleasesOctober PCE report on Nov 25, 2026; November jobs report on Dec 4, 2026 [3][5][6]
Upcoming economic data and Fed commentary may influence the December rate decision. Two key data releases, the October Personal Consumption Expenditures (PCE) report and the November jobs report, are scheduled before the Federal Open Market Committee (FOMC) meeting on December 9, 2026, and could prompt a 50 basis point interest rate hike [3][5][6]. On November 10, 2026, Fed Governor Christopher Waller stated that a 50 basis point hike should be considered if October core CPI reached 'around 0.3 percent or even higher' [1]. The October core CPI, released that same day, printed at precisely 0.3%, meeting his specified condition [1][2][3]. Waller also cited headline PCE inflation rising 0.5% in September and 3.7% over the year, with core PCE up 3.1% and more than 70% of its services components annually rising faster than 3%, as further support for a larger hike [1].
Strong employment data recently increased probabilities for a December rate hike. The October 2026 jobs report, released on November 6, showed 165,000 payroll gains and a decrease in unemployment to 4.1% [2][3][4][5]. This outcome increased the odds of a December hike on Polymarket from approximately 64.5% to 76.5% [2][3][4][5]. The upcoming October PCE report is due on November 25, 2026, and the November jobs report on December 4, 2026 [3][5][6]. Robust figures from these reports, indicating persistent inflation or a tighter labor market, could further strengthen the argument for a 50 basis point increase. Conversely, a soft jobs report or resistance from other officials to Governor Waller's stance would be the clearest path for a 'No change' outcome to regain traction [3][5][6].
Sources (6)
  1. 1Waller puts a half-point Fed hike on the table, and today's inflation report could decide it — Future Timesfuturetimes.cloud
  2. 2October CPI comes in hot at 0.4% and core hits Waller’s 0.3% line: markets now price a December Fed hike at 95%, and a half-point at 11%predictdesks.com
  3. 3Will the Fed Hike Interest Rates in December? Latest News | Prediction.comprediction.com
  4. 4Fed Decision in December?polymarket.com
  5. 5Fed December 2026 Rate Decision Odds: Hike or Hold?predictmarkets.com
  6. 6Fed Meeting December 2026: Rate Hike Odds 87%, Taylor Rule Today 4.78% | Nowflationnowflation.com

7. How does the Fed's September 2026 Summary of Economic Projections (SEP) 'dot plot' support the market's expectation for a 25 basis point hike in December?

Median End-2026 Federal Funds Rate4.1% (4.125% midpoint) [1][2][3][4]
FOMC Officials Projecting One Hike12 out of 18 (projecting 4.125%) [1][2][4]
CME FedWatch December Hike Likelihood71.4% (to 4%-4.25%) [5][6]
The Federal Reserve's September 2026 Summary of Economic Projections (SEP) strongly supports a December rate hike. Its median projection indicated a need for one additional rate increase before year-end, which aligns with a clear majority of FOMC officials anticipating higher rates [1][2][3][4]. The SEP's median end-2026 federal funds rate projection was 4.1% (4.125% midpoint), representing exactly one 25-basis-point hike above the 3.875% post-September midpoint [1][2][3][4]. A significant majority of 12 out of 18 FOMC officials projected end-2026 rates at 4.125%, while only two anticipated no further change, signaling clear support for at least one more 25 basis point increase before year-end [1][2][4]. The Fed's September 2026 inflation projections, which sat above the latest readings, were also consistent with the median dot plot [2].
Market participants widely anticipate a December rate hike, reflecting these signals. This broad market consensus for a December hike is evident in prediction markets [1][2][4][7][8][9][10][11][5][12][6]. As of late October to early November 2026, Polymarket priced a 25 basis point December hike at 74-86%, and Kalshi priced it at 85-86% [1][2][7][8][9][10][11][5][12][6]. Additionally, the CME FedWatch tool projected a 71.4% likelihood of the Federal Reserve increasing the rate to 4%-4.25% during its December meeting [5][6]. The December 8-9, 2026 FOMC meeting, which will include a fresh SEP and dot plot, is considered the natural point for officials to deliver the hike implied by their September median projection [2][3][5][13].
Sources (13)
  1. 1How Prediction Markets Nailed the September 2026 Fed Rate Hike — and What They're Pricing for Decemberpredictionmarkets.us
  2. 2Fed December rate hike odds: what data and markets saynewsmargin.com
  3. 3The Fed's Own Numbers Say "Hike Again in December." Polymarket Prices It at 44¢ | AInvestainvest.com
  4. 4Fed Decision in December? Market Pricing Reflects Hawkish Shift and Rule Ambiguity | AInvestainvest.com
  5. 5Will the Fed Hike Interest Rates in December? Latest News | Prediction.comprediction.com
  6. 6Will the Fed Hike Rates in December? Here’s What the Prediction Market Is Sayingbenzinga.com
  7. 7Fed Decision in December?polymarket.com
  8. 8Fed Decision in December? — Polymarket odds & markets | Spreadictionspreadiction.com
  9. 9Will the Fed Hike Rates by 25 bps in December 2026? Odds | Lines.comlines.com
  10. 10Fed Decision in December? Odds, Platforms, and Market Data | The Prediction Marketsthepredictionmarkets.com
  11. 11Fed Decision in December?quiverquant.com
  12. 12Another Rate Hike Coming in 2026?predictionreporting.com
  13. 13Hike or Hold? The Fed's Big December Question | Forecast.fmforecast.fm

8. How do rate hike probabilities from the CME FedWatch tool compare with the consensus forecast from the November Reuters poll of economists?

CME FedWatch Probability (Post-FOMC)82.6% for Dec 2026 hike [1][2][3][4][5][6][7]
Polymarket Dec 2026 Hike Probability81-85% [1][2][4][5][6][7][8][9]
Reuters Poll ConsensusMajority anticipates 25-basis-point Dec 2026 hike [10]
Prediction markets indicate higher December 2026 rate hike probabilities than the Reuters poll. The CME FedWatch tool and other prediction markets show slightly elevated probabilities for a December 2026 rate hike when compared to the consensus forecast from the November 2026 Reuters poll of economists [1][2][4][5][6][7][8][9]. The Reuters poll itself indicates a majority, but not an overwhelming consensus, among economists for a 25-basis-point increase in rates [1][2][4][5][6][7][8][9][10].
Probabilities for a December rate hike increased significantly in late October. On October 30, 2026, the CME FedWatch tool indicated a 71.4% probability of a 25-basis-point December 2026 rate hike, which subsequently rose to 82.6% after the October 28 FOMC meeting [1][2][3][4][5][6][7]. By early-to-mid November 2026, this probability was approximately 76.8% to 80.7% [1][2][4][5][6][7]. Expectations for a December hike were further bolstered across all sources following the release of strong October jobs data on November 6, 2026, which included 165,000 payrolls and an unemployment rate of 4.1% [5][7][8]. Specific prediction market figures, such as Polymarket at 81-85% and Kalshi at 77-84.5%, along with the CME FedWatch tool's 76.8-82.6% range, collectively reflect these slightly higher probabilities for a December rate increase compared to the Reuters consensus [1][2][4][5][6][7][8][9].
Sources (10)
  1. 1Fed Rate Decision Odds December 2026 (November 2026)windailysports.com
  2. 2The Fed Skipped October. Is December a Done… | Predictagonpredictagon.com
  3. 3Will the Fed Hike Rates in December? Here’s What the Prediction Market Is Sayingbenzinga.com
  4. 4Fed December 2026 Decision: Rate Hike Odds and What Comes Next | Vaticvaticmarkets.io
  5. 5Fed December 2026 Rate Decision Odds: Hike or Hold?predictmarkets.com
  6. 6Fed Rate Decision Odds: December 9 Meeting | PricedNewspricednews.com
  7. 7Will the Fed Hike Interest Rates in December? Latest News | Prediction.comprediction.com
  8. 8Fed Decision in December?polymarket.com
  9. 9Economypolymarket.com
  10. 10Federal Reserve Signals Further Rate Hike in December Amid Persistent Inflation Risks - A BIT LAVISH | MIAMI'S MAGAZINEabitlavish.com

9. What is the evidence that public criticism from President Trump has influenced market expectations of Fed Chair Kevin Warsh's policy decisions?

Market Expectation for December Hike81-86% probability for a 25 bps increase [1][2][3][4][5][6]
Fed October 28, 2026 DecisionRates held at 3.75%-4.00% by a 10-2 vote [7][8]
Trump's Demanded Interest Rate1% or lower [9][10]
Market expectations for a December rate hike persist despite political pressure. Market expectations for Fed Chair Kevin Warsh's December policy decisions are primarily driven by economic fundamentals, despite President Trump's public criticism and demands for lower interest rates [9][10][1][3][11]. Fed Chair Warsh has explicitly stated that political considerations did not influence recent rate decisions, describing internal deliberations as having 'nothing to do with politics' [9][8]. Current market expectations for a 25 basis points increase in December are priced at 81-86% across platforms like Polymarket and Kalshi [1][2][3][4][5][6]. This aligns with institutional forecasts, such as JPMorgan predicting a December rate hike and Bank of America forecasting three rate hikes before year-end, notwithstanding White House pressure for lower rates [10]. President Trump has publicly demanded interest rates of 1% or lower and claimed inflation is 'way down,' directly contradicting Warsh's assessment that inflation remains 'too high,' which signals the Chair's attempt to maintain the Federal Reserve's institutional independence [9][10].
Recent Fed actions signal a probable December rate increase. The Federal Reserve's October 28, 2026, decision to hold rates at 3.75%-4.00% by a 10-2 vote was perceived by markets as a hawkish hold, keeping a December hike alive [7][8]. However, Warsh's open rejection of forward guidance and abandonment of language tying policy to returning inflation to 2% initially created uncertainty in the market [11][8]. This initially caused the December hike probability to drop from approximately 90% to 70% before recovering to its current range of 81-86% [11][8].
Sources (11)
  1. 1Fed Decision in December?polymarket.com
  2. 2Fed Decision in December? — Polymarket odds & markets | Spreadictionspreadiction.com
  3. 3Will the Fed Hike Rates by 25 bps in December 2026? Odds | Lines.comlines.com
  4. 4Fed Decision in December? Odds, Platforms, and Market Data | The Prediction Marketsthepredictionmarkets.com
  5. 5Fed Decision in December?quiverquant.com
  6. 6Fed Decision in December?probsee.com
  7. 7Fed Rate Decision: Hawkish Hold at 3.75%-4% in 10-2 Voteadmiralmarkets.com
  8. 8Did the Fed Raise Rates Today? Warsh Decision and Votecosanalyst.com
  9. 9Fed Chair Warsh says inflation too high, refuting Trump claimsscanx.trade
  10. 10Will Fed cut rates in December?polyprediction.app
  11. 11The 'Fed Decision in December' Market Is a Headline Trap - It's Really a ~70% Bet on a Hike, and It Just Got Cheaper | AInvestainvest.com

10. How does Fed Chair Warsh's view on AI as an inflationary driver differ from how past Fed chairs, like Alan Greenspan, viewed technology booms?

Annual Inflation3.7% in September 2026 [1]
Inflation Exceeding TargetsNearly 6 years [1]
Warsh's Inflation Assessment'Too high' in October 2026 [1]
Fed Chair Warsh views AI as an inflationary driver, unlike past chairs. In October 2026, Fed Chair Kevin Warsh stated that inflation is "too high" and has exceeded targets for nearly six years, with annual inflation accelerating to 3.7% in September 2026. This inflation was partly attributed to technology-related consumer goods prices associated with the AI buildout [1]. This perspective starkly contrasts with how past Fed chairs, such as Alan Greenspan, viewed technology booms. During the Greenspan era, technology advancements like the 1990s internet boom were largely perceived as productivity-enhancing and ultimately disinflationary, allowing the Federal Reserve to tolerate stronger growth without aggressive policy tightening [1][2][3][4][5][6].
The current AI investment cycle presents unique demand-side inflationary pressures. Unlike past technology booms, the present AI capital expenditure cycle is generating demand-side price pressure in areas such as energy, chips, and data centers before significant productivity gains fully materialize, creating a different policy challenge compared to the Greenspan era [1][2][3][4][5][6]. Warsh also observed that interest rates do influence new technology investments and that capital expenditure is broadening, indicating a more direct consideration of the AI investment cycle within the Fed's policy framework than was typical under Greenspan [1]. Furthermore, a Fed official raised concerns that the AI sector could become a systemically risky industry due to rapid investment and borrowing, adding a financial stability dimension to the AI-inflation debate that was less prominent during the Greenspan period [7].
Sources (7)
  1. 1Fed Chair Warsh says inflation too high, refuting Trump claimsscanx.trade
  2. 2Will AI technology lead to higher or lower US inflation rates by end of June 2027 - Manifold Markets Odds | CoinRithmcoinrithm.com
  3. 3Williams: One More Rate Hike in 2026, None in 2027ratespike.com
  4. 4Scale of a Fed tightening cycle outweighs its start | Investor Strategy Newsioandc.com
  5. 5Fed Hawks Barkin and Goolsbee Signal Inevitable Rate Hikes Amid AI Uncertainty | Woofun Researchwoofun.ai
  6. 6Will Fed chair Kevin Warsh’s AI optimism put him in a corner if the sector stalls? · Vizo Litevizo-lite.com
  7. 7Will Fed cut rates in December?polyprediction.app

11. What Could Change the Odds

Key Catalysts

The Federal Open Market Committee meeting on December 8-9, 2026, with the rate decision on December 9, 2026, at 2:00 PM ET, represents the next policy decision, including a Summary of Economic Projections (dot plot) [1][2]. The current fed funds target range is 3.75%-4.00% [1][2][3][4][5]. Prediction markets currently price a high likelihood of a rate increase. As of November 10-11, 2026, Kalshi shows an 86% chance of a 25bp hike, 10% for a >25bp hike, and 5% for a hold; Polymarket indicates 81% for a 25bp increase and 20% for no change; CME FedWatch reports 88% for 25bp and 11% for 50bp [3][4][5][6][7][8]. The expected post-meeting effective federal funds rate is approximately 4.13%-4.16% [3][4][5][6][7][8].
This outlook is supported by recent economic data and hawkish Fed commentary. October 2026 CPI rose 0.4% month-over-month, exceeding the 0.3% Dow Jones consensus, with core CPI at 0.3% for the third consecutive month [6][9]. Fed Governor Christopher Waller stated that a 0.3% core CPI increase could lead him to consider a 50bp hike [6][9]. Fed Chair Kevin Warsh, in office since May 2026, has adopted a hawkish stance, removing the 'easing bias' and emphasizing price stability [10][11][12]. He noted that Q3 2026 GDP growth likely exceeded 3%, business investment rose at a double-digit pace, and capital expenditures were at a historically high share of GDP [10]. Dallas Fed President Lorie Logan indicated the Committee needs 'at least two more' quarter-point increases, and St. Louis Fed President Alberto Musalem stated more tightening will be necessary 'soon' [13][14].
The September 2026 SEP dot plot showed a median year-end 2026 fed funds rate at 4.1% and year-end 2027 at 4.1%, implying further hikes [15][16][12]. PCE inflation is projected at 3.7% for 2026 and 2.3% for 2027 [15]. Warsh attributed rising bond yields to economic strength, surging AI capital expenditures, and geopolitical factors, rather than direct inflation concerns, and noted US government debt has exceeded $40 trillion [17][18][19][20]. The Supreme Court's February 2026 6-3 ruling struck down Trump's IEEPA emergency tariffs, removing ~$2 trillion in deficit reduction, leading to Trump's response of a new 10% universal tariff [21][22][23][24][25]. The CBO estimates this would add ~$1.1 trillion to the deficit over 10 years [25].

Key Dates & Catalysts

  • Closes: December 09, 2026
Sources (25)
  1. 1Federal Reserve Board - Calendar: December 2026federalreserve.gov
  2. 2The Fed - Meeting calendars and informationfederalreserve.gov
  3. 3December 2026 FOMC Meeting: Rate Probabilities | Frenzy Capitalfrenzycap.com
  4. 4Fed Rate Odds: 86% Chance of a 25bp Hike in December | Kalshikalshi.com
  5. 5Fed Meeting December 2026: Interest Rate Decision Odds | Kalshikalshi.com
  6. 6Market spooked because now the Fed may need a supersized hike in Decembercnbc.com
  7. 7Fed Decision in December?polymarket.com
  8. 8Economics Fed decision Predictions - Robinhoodrobinhood.com
  9. 9Traders raise odds of 50 bps Fed rate hike as CPI rise exceeds expectations - The Economic Timesm.economictimes.com
  10. 10Transcript of Chairman Warsh’s Press Conference, October 28, 2026federalreserve.gov
  11. 11Full text of Federal Reserve Chairman Kevin Warsh; signals rate hikes may be needed with US inflation - CNBC TV18cnbctv18.com
  12. 12Kevin Warsh's First FOMC: 'Easing Bias' Removed, Price Stability Takes Center Stage (Comprehensive) - The Asia Business Dailyasiae.co.kr
  13. 13Economy, the Fed, and Rates…crefc.org
  14. 14FOMC Meeting, October 27-28 | EY - USey.com
  15. 15FOMC SEP Monitor | Yardeni Researchyardeni.com
  16. 16FOMC June 2026 SEP: The "Higher for Longer" Reality Just Got Re-Priced | Mohamed Khatablinkedin.com
  17. 17Fed's Warsh lays out forces driving up bond yields | Reutersreuters.com
  18. 18Fed's Warsh surprised by world economy's 'resilience'finance.yahoo.com
  19. 19Fed chair Warsh pledges price stability but avoids hints about rates | AP Newsapnews.com
  20. 20Key Moments from Kevin Warsh’s International Monetary Fund Speech - WSJwsj.com
  21. 21Supreme Court tariff ruling clouds Fed's rate path after a year of upheaval | Reutersreuters.com
  22. 22US 10-Year Yield Rises as Supreme Court Voids Trump Tariffstradingeconomics.com
  23. 23SCOTUS tariff decision may lift risk assetsbny.com
  24. 24Trump’s Dangerous Tariff Addiction  | Washington Monthlywashingtonmonthly.com
  25. 25Trump Tariffs to Add $1.1 Trillion to Deficits as Inflation Hits 3.4%, Bond Markets Reprice Fiscal Risk | Macro | based.infobased.info