December Fed Hike “Virtually a Certainty,” WSJ’s Timiraos Says, as Focus Shifts to 25 vs 50 Basis Points

A Federal Reserve rate hike at the December 8–9 policy meeting is “virtually a certainty” after a third straight strong inflation report, The Wall Street Journal’s chief economics correspondent Nick Timiraos wrote on November 11. The bigger question, he said, is how fast the Fed will move.The Fed could raise rates by 25 basis points at each meeting, move by 50 basis points at once, or signal several 25 basis point hikes in a row. Timiraos said the choice will show whether this is still a mild adjustment, with the two or three more hikes many officials expect, or the start of a longer effort to slow the economy and bring down inflation.Fed Governor Christopher Waller, who had previously supported holding rates steady, said last week that a 50 basis point hike should be considered in December if core prices rose about 0.3% in October. Tuesday’s data showed exactly that. Dallas Fed President Lorie Logan also suggested after the release that the pace of hikes may need to speed up. Timiraos noted that such tactical decisions are often left to the Fed Chair, currently Kevin Warsh.Markets price about an 86% chance of a 25 basis point hike in December and a 14% chance of 50 basis points.