Traders are betting heavily on another Federal Reserve rate rise in December — and Tuesday’s inflation report came in hotter than expected, confirming the case for one.
The odds of a quarter-point hike at the Fed’s December 8–9 meeting stood at roughly 80% ahead of the release, depending on the measure and the hour. CME FedWatch put the odds at 80.5%, up from 70.7% a week earlier, according to Coinotag; InvestingLive cited about 84%; other coverage put the range at 77%–79%.
The Fed raised its target range to 3.75%–4.00% on September 16, its first increase since 2023, and held it there on October 28 on a 10–2 vote, with two members preferring another increase. Friday’s hot jobs report — 165,000 jobs added in October, far above the 65,000 expected — is what pushed the odds up. Fed Chair Kevin Warsh, who took the post on May 22, 2026, has not committed to a December move and has said decisions will depend on incoming data.
Related: Mortgage Rates Ease to 7.18% as Borrowers Watch Tuesday CPI
Hot print vs cool print
Tuesday’s October CPI is the last inflation reading before the meeting. Headline prices rose 0.4% on the month, above the 0.3% forecast, and core prices rose 0.3%, above the 0.2% expected, according to the Bureau of Labor Statistics. No annual rate was published because October 2025 data was never collected during last year’s government shutdown.
The print came in hot — 0.4% headline and 0.3% core, both above forecasts — so traders are likely to price in a December hike almost fully, lifting the dollar and pushing bond yields and mortgage rates higher. Bank of America had said the bar for changing the hiking expectation was exceptionally high: only a monthly core reading of 0.1% would do it. The actual 0.3% core reading leaves the hiking case intact.
What it costs you
For borrowers, the difference is real money. The average APR on credit cards assessed interest was about 22.14% in the second quarter of 2026, according to Federal Reserve data cited by US Money Pulse, while a separate tracker put the average credit card APR at 21.19% as of November 6 — use “around 21%–22%” as the range. The prime rate, which many variable-rate cards follow, is 7.00%.
Car loans are cheaper but still dear: the average 48-month new-car loan rate is about 7.47%, according to PrimeRates, and the Federal Reserve’s measure for 60-month new-car loans at banks was 7.54% in August. A December hike would push variable card rates up within a billing cycle or two, while fixed car and mortgage rates would follow bond yields higher.
The practical advice is unchanged: pay down variable-rate card debt first, since it is the most expensive borrowing most households carry, and do not count on a rate cut to bail out a stretched budget. The CPI number landed at 8:30 a.m. at 0.4% headline and 0.3% core — hotter than forecast — and it keeps a December hike firmly on the table.
Sources: Coinotag, “Bitcoin Faces 3.9% October CPI Test” (10 Nov 2026); InvestingLive, “US CPI preview” (10 Nov 2026); political.org, “Inflation Stays Hot Ahead of Key October CPI Report” (9 Nov 2026); US Money Pulse, “How the Fed’s Higher Rates Affect Your Savings, Loans and Mortgage in 2026” (7 Nov 2026); PrimeRates consumer credit dashboard (6 Nov 2026); MentorSurge, “Fed Holds Rates” (28 Oct 2026); Bureau of Labor Statistics, Consumer Price Index — October 2026 (10 Nov 2026). Rates are published averages, not offers.
