The Federal Reserve is almost certain to raise interest rates on 9 December 2026, and the only real debate left is by how much. The trigger was the October consumer price index, released on 10 November, which came in hotter than forecast for the second month running.
Rate rises are not what most Americans expected in 2026. But inflation has been above the Fed's 2% target for about five and a half years, and the Iran war, tariffs and the AI data-centre boom are all pushing prices the wrong way.
The short version
- October CPI: prices rose 0.4% in the month (forecast 0.3%). Core prices, excluding food and energy, rose 0.3% (forecast 0.2%).
- No annual rate: the BLS could not publish a 12-month figure, because October 2025 prices were never collected during that year's shutdown.
- Producer prices: up 0.3% in October and 6.5% from a year earlier, the biggest annual rise since November 2022.
- Market odds (13 November): 100% chance of a hike on 9 December. About 87% for a quarter point, 13% for a half point (CME FedWatch).
- Current rate: 3.75% to 4%, held at the 28 October meeting by a 10-2 vote.
- Ten-year Treasury yield: about 5.13%, which feeds straight into mortgage and business loan pricing.
What did the October 2026 CPI report show?
| Category | Change in October |
|---|---|
| All items | +0.4% |
| Core (ex food and energy) | +0.3% |
| Energy | +0.7% |
| Gasoline | +1.0% |
| Electricity | +0.9% |
| Food | +0.5% |
| Beef | +0.9% |
| Shelter | +0.3% (over 30% of the headline rise) |
| Transportation services | +0.8% |
| Airline fares | +0.4% |
| Used cars and trucks | -1.2% |
| Apparel | +0.1% |
September was worse, with headline prices up 0.6% in a single month. Two hot months in a row is what moved the Fed.
Why is there no annual inflation rate for October 2026?
Because of the 43-day government shutdown that ended on 12 November 2025, the Bureau of Labor Statistics did not collect October 2025 price data. With no base month, it cannot calculate a 12-month change for most of the index.
Bank of America filled the gap with its own assumptions and estimated annual inflation at about 3.8% headline and 2.7% core. That is a bank's estimate, not an official figure, and you will see it quoted carelessly.
What are Fed officials saying?
| Official | What they said |
|---|---|
| Christopher Waller, governor | Leaning towards a 25 basis point hike in December, and said a 50 point move should be considered if core CPI reached about 0.3%. It did. |
| Lorie Logan, Dallas Fed | Sees a need for two more quarter-point increases: "It may be possible to move more rapidly this winter than the [FOMC] has moved so far this fall." |
| Anna Paulson, Philadelphia Fed | Further gradual tightening "seems appropriate", because "inflation pressures are still very much with us." |
"This was the report the market could least afford to see," Karen Manna of Federated Hermes told CNBC.
When is the next Fed meeting?
The Federal Open Market Committee meets on 8 and 9 December, with the decision at 2 p.m. Eastern on Wednesday 9 December. Three data releases land before it:
| Date | Release |
|---|---|
| Wednesday 25 November | October PCE inflation (the Fed's preferred measure) and the second estimate of Q3 GDP |
| Friday 4 December | November jobs report |
| Thursday 10 December | November CPI, the day after the decision |
So the Fed will decide without seeing November's consumer prices. That is one reason some officials want to move in bigger steps now.
What does a December rate hike mean for you?
Credit cards and variable-rate loans move almost immediately. Most card rates are tied to the prime rate, which moves with the Fed. A quarter-point hike adds roughly $2.50 a year in interest for every $1,000 of balance you carry.
Mortgages follow the ten-year Treasury yield more than the Fed itself, and that yield is already above 5%. We break this down in mortgage rates in November 2026.
Savings are the one place higher rates help. High-yield savings accounts and short-term Treasury bills tend to reprice upwards within weeks.
Business borrowing gets dearer and tighter. Lines of credit reprice, and lenders get more selective. A net 37% of small firms in the October NFIB survey plan to raise prices in the next three months, the highest since July 2022, which tells you how many are being squeezed on costs. If that is you, our working capital guide and a 13-week cash flow forecast are the two tools to put in place before the hike, not after.
This post explains what changed and why. It is not investment advice.
Frequently asked questions
Will the Fed raise rates in December 2026?
Markets price it as close to certain. On 13 November, CME FedWatch showed 100% odds of an increase at the 9 December meeting, with about 87% on a quarter point and 13% on a half point.
What was the October 2026 inflation rate?
Consumer prices rose 0.4% in the month and core prices 0.3%. The BLS did not publish an annual rate because October 2025 data was not collected during the shutdown.
What is the federal funds rate now?
3.75% to 4%, after the Fed held rates at its 28 October 2026 meeting.
When is the next CPI report?
The November CPI is due on Thursday 10 December 2026, the day after the Fed's decision.
Sources
CNBC on the October 2026 CPI; BLS CPI release; Fox Business; Forbes on Waller; The National; CNBC markets, 13 November for PPI, FedWatch odds and yields. As of 15 November 2026.
