Fed funds futures traders boosted the likelihood of a quarter-point rate hike by the Federal Reserve in December to 36% after September’s consumer price index produced hotter-than-expected headline inflation rates. Data released on Thursday showed consumer prices climbed 0.4% for last month and was steady at 3.
7% over the 12 months that ended in September — both above economists’ expectations. The market-implied likelihood of a quarter-point December rate hike, which would lift the fed funds rate target to between 5.5%-5.75%, jumped from 26.3% a day ago, according to the CME FedWatch Tool. Traders even saw a slight 2.7% chance of a half-point December rate hike, but stuck with an almost 90% likelihood of no action by the Fed on Nov. 1.