Traders priced out any chance of the Fed holding interest rates steady on Dec 9 and assigned a roughly 10% probability to a 50 basis point increase on CME FedWatch, with about 90% odds on a 25 basis point move, after October’s inflation report showed broadening price pressures. Supercore CPI, which tracks core services excluding housing, rose 0.4% on the month and 3.52% from a year earlier, accelerating to a 5.5% annualized pace that marked the strongest reading since April 2024. The weighted share of CPI components rising faster than 2% annualized jumped to 76.3%, the highest since August 2022.

Both overall and core inflation beat consensus estimates by 0.1 percentage point, with headline CPI rising 0.4% month over month and core CPI advancing 0.3% for a third straight month. Only one of 70 Wall Street forecasts projected a higher headline reading. Food at home climbed 0.44%, the largest monthly increase since April, and dining out rose 0.52%, the biggest gain since December 2025, while intercity bus and train fares surged 6.6%, delivery prices added 1.8%, motor vehicle insurance increased 0.7% and medical care rose 0.6%. Used car prices fell 1.2%, and coffee dropped a record 3.6%.

The 0.3% core reading met the threshold Fed Governor Christopher Waller laid out hours earlier for considering a half point hike in December to frontload tightening and protect the central bank’s credibility, which would be the largest single meeting increase since December 2022. Because the 2025 government shutdown prevented collection of October 2025 price data, the Bureau of Labor Statistics omitted official 12 month headline and core rates, though Bloomberg estimates put annual headline inflation at 4.02%, up from 3.74% in September.