{"id":441652,"date":"2026-11-05T19:40:05","date_gmt":"2026-11-05T12:40:05","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/what-could-stop-the-fed-raising-rates-in-december-441652\/"},"modified":"2026-11-05T19:40:05","modified_gmt":"2026-11-05T12:40:05","slug":"what-could-stop-the-fed-raising-rates-in-december","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/what-could-stop-the-fed-raising-rates-in-december-441652\/","title":{"rendered":"What Could Stop the Fed Raising Rates in December?"},"content":{"rendered":"
\n

A December rate
\n increase remains the market\u2019s expected outcome. Investing.com\u2019s rate\u00a0
\n monitor put the probability of a quarter-percentage-point increase at about 80%
\n on 4\u00a0 November. Another hold would depart from that expectation, making
\n the evidence that\u00a0 might persuade the Federal Reserve to wait particularly
\n relevant for traders.\u00a0<\/p>\n

The Fed raised its
\n benchmark rate to 3.75\u20134% in September and left it unchanged on 28\u00a0
\n October. Dallas Fed President Lorie Logan supported the hold, then argued two
\n days later\u00a0 for at least two more quarter-point increases. Her position
\n illustrates how officials can\u00a0 favour further tightening while allowing
\n more time between decisions.\u00a0<\/p>\n

A similar pause came
\n in June 2023, when the Fed held rates to assess incoming information\u00a0 and
\n earlier tightening before raising them again in July. This time, the case for
\n waiting\u00a0 depends on whether inflation continues to ease and subdued hiring
\n develops into broader\u00a0 employment weakness.\u00a0<\/p>\n

Inflation Has Eased
\n Unevenly\u00a0<\/p>\n

The Personal
\n Consumption Expenditures (PCE) price index rose 3.6% between September\u00a0
\n 2025 and September 2026, above the Fed\u2019s 2% annual inflation target. Prices
\n excluding food\u00a0 and energy, known as core inflation, increased 0.3% in
\n both August and September 2026.<\/p>\n

Across the third
\n quarter of 2026, however, core inflation slowed to an annualised 2.5%,
\n from\u00a0 3.3% in the second quarter. These figures express each quarter\u2019s
\n price increases as an\u00a0 annual rate. They show improvement over the broader
\n period, while the latest monthly\u00a0 readings leave its durability open to
\n question.\u00a0<\/p>\n

Energy prices add
\n uncertainty. EBC analyst Edgar
\n Peredo identifies disruption around the\u00a0 Strait of Hormuz as a potential
\n source of persistent inflation, as higher fuel costs feed into\u00a0 transport
\n and production. Oil nevertheless fell more than 8% on 4 November as
\n investors\u00a0 assessed prospects for Middle East peace following the US
\n elections.\u00a0<\/p>\n

Democrats won both
\n chambers of Congress and will take control in January. The result\u00a0 prompted investors to reassess
\n the outlook for the conflict and future government spending,\u00a0 although the
\n legislative consequences remain ahead. Sustained lower oil prices would
\n help\u00a0 ease inflation pressure; renewed supply disruption would threaten
\n that relief.\u00a0<\/p>\n

October\u2019s consumer
\n inflation report, due on 10 November, will provide the next major\u00a0 update
\n on prices. Several softer readings would make a stronger case for patience than
\n a\u00a0 short-lived decline in oil alone.\u00a0<\/p>\n

Slower Hiring Could
\n Strengthen the Case for Waiting\u00a0<\/p>\n

Payrolls increased by
\n 29,000 in September 2026, while July and August\u2019s combined gains\u00a0 were
\n revised down by 60,000. Unemployment edged up to 4.2% from 4.1% in
\n August,\u00a0 although it remained within the narrow range recorded since
\n March.\u00a0<\/p>\n

Fed Chair Kevin Warsh
\n offered a more reassuring assessment at his October press\u00a0 conference,
\n pointing to low unemployment insurance claims. The October jobs report,\u00a0
\n scheduled for 6 November, will help establish whether September\u2019s subdued hiring\u00a0
\n continued.\u00a0<\/p>\n

Further weak hiring
\n alongside rising unemployment would increase the risk that higher\u00a0
\n borrowing costs deepen a slowdown. Steadier employment would give officials
\n more scope\u00a0<\/p>\n

to respond to
\n persistent inflation. The distinction is important for December: a
\n resilient\u00a0 labour market makes an increase easier to absorb, while the
\n inflation outlook determines\u00a0 whether further restraint is
\n warranted.\u00a0<\/p>\n

Borrowing
\n Conditions Remain Uneven\u00a0<\/p>\n

Warsh said financial
\n and credit conditions had tightened for some households and\u00a0 businesses
\n since September\u2019s increase. His assessment distinguished that recent\u00a0
\n tightening from the overall level of borrowing conditions. The Fed\u2019s October
\n lending survey\u00a0 provides a similarly mixed picture: standards tightened
\n for small-business and commercial\u00a0 property loans, while those for large
\n and medium-sized business loans were broadly\u00a0 unchanged.\u00a0<\/p>\n

Business loan demand
\n weakened partly because companies needed less financing for\u00a0 investment
\n and partly because they found more attractive funding elsewhere. Some\u00a0
\n borrowers are reducing their investment needs, while others are changing
\n lenders. Broader\u00a0 evidence of declining investment and hiring would
\n strengthen the argument for allowing\u00a0 September\u2019s increase more time to
\n work.\u00a0<\/p>\n

What Bond Yields
\n Mean for the Dollar and Gold\u00a0<\/p>\n

Peredo emphasises that
\n gold\u2019s response to weaker employment also depends on bond\u00a0 yields, the
\n dollar, and investor demand. Each can change for reasons beyond the next
\n Fed\u00a0 decision.\u00a0<\/p>\n

The market moves on 4
\n November provide a recent example. Gold rose 2.2% by 06:19 GMT\u00a0 as the
\n dollar weakened and Treasury yields declined. Later that day, Reuters reported
\n the\u00a0 benchmark 10-year Treasury yield at 4.89%, down about six basis
\n points. These were\u00a0 readings from different points in the session, but
\n both reports described support for bonds\u00a0 as investors reassessed the
\n outlook after the election.<\/p>\n

Lower expected US
\n interest rates generally weaken support for the dollar. For gold, falling\u00a0
\n bond yields after allowing for expected inflation reduce the appeal of
\n interest-paying\u00a0 alternatives. Longer-term yields also reflect inflation
\n and government borrowing\u00a0 expectations, so their response can differ from
\n changes in the probability of a December\u00a0 increase.\u00a0<\/p>\n

A hold would become
\n more plausible if easing inflation were accompanied by broader\u00a0 employment
\n weakness. Whether that shift supported gold would also depend on the\u00a0
\n response of bond yields and the dollar. Traders therefore have two related developments
\n to\u00a0 assess: the evidence shaping the Fed\u2019s decision and the returns
\n available elsewhere in\u00a0 financial markets.<\/p>\n

This article was written by IL Contributors at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

A December rate increase remains the market\u2019s expected outcome. Investing.com\u2019s rate\u00a0 monitor put the probability of a quarter-percentage-point increase at about 80% on 4\u00a0 November. Another hold would depart from that expectation,…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-441652","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=441652"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441652\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=441652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=441652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=441652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}