October CPI comes in hot at 0.4% and core hits Waller’s 0.3% line: markets now price a December Fed hike at 95%, and a half-point at 11%

The October inflation report has all but sealed a December rate hike, and opened the door to a bigger one. Consumer prices rose 0.4% in October and core prices, which exclude food and energy, rose 0.3%, the Bureau of Labor Statistics reported on Tuesday 10 November. Economists polled by Dow Jones had expected 0.3% and 0.2%, CNBC reported.

The core figure hit the line Fed Governor Christopher Waller had drawn only hours earlier. In a speech in London he said he would support a quarter-point increase at the December meeting, and that if October core inflation came in “around 0.3 percent or even higher,” “a 50 basis point hike in the policy rate should be considered.”

The prediction markets moved at once. Polymarket’s market on the December decision now has a 25 basis point hike at 84.5% and 50 basis points or more at 10.8%, a combined 95% for a hike. “No change” has fallen to 4%, from about 22% at the weekend.

The odds

• Polymarket: 25 bp hike 84.5%, 50 bp or more 10.8%, no change 4.05%, any cut under 1%. The market has traded $23.6 million, more than $6 million of it in the last 24 hours.
• Kalshi: “Hike 25bps” at 85¢, “Hike >25bps” at 13¢ and “Fed maintains rate” at 4¢. Kalshi’s market on the rate after the meeting has “Above 4.00%” at 97¢ and “Above 4.25%” at 10¢.
• Polymarket, another hike in 2026: 95.65%, up 16 points in a day.
• CME FedWatch put a half-point move at 13.6% after the report, up from about zero, CNBC reported; Fox Business gave 12.7%.

How the odds moved

The week had already turned hawkish. Before the October jobs report on Friday 6 November, Polymarket had a December hike at about 64.5% and no change at 33.5%. Payrolls rose by 165,000, well above forecasts, and unemployment was 4.1%; by the weekend a quarter-point hike was 76.5%. By Tuesday morning, after Waller’s remarks, it was about 88.5%.

The CPI report, at 8:30 a.m. ET (13:30 UTC), changed the mix. The quarter-point bracket slipped a little, to 84.5%, because money moved into the half-point bracket, which jumped from about 4% to 11.75% within the hour. No change fell from 7.5% to 2.65%.

What the report said

• Headline: +0.4% after +0.6% in September.
• Core: +0.3%, the third straight month at that pace.
• Gasoline: +1%, a sharp slowdown from +9.1% in September. Energy overall rose 0.7%.
• Food: +0.5%. Shelter rose 0.3% and accounted for more than 30% of the headline increase, CNBC reported.
• Other: transportation services +0.8%, electricity +0.9%, used cars and trucks −1.2%.

No annual rate. The BLS did not publish a 12-month inflation rate. The government shutdown from 1 October to 12 November 2025 stopped it collecting enough October 2025 prices, so there is nothing to compare with, CNBC and StockTitan reported. The last official annual rate, for September, was 3.7%. Navy Federal economist Heather Long told Fox Business the implied annual rate was “around 4%.” The annual figure returns with the November report on 10 December, a day after the Fed decides.

What Fed officials are saying

Waller, speaking before the data, said: “I am leaning toward supporting an increase in our policy rate of 25 basis points at the FOMC’s December meeting.” He added that a quarter point alone, if core inflation stayed hot, would “put our credibility at risk,” according to the text quoted by StockTitan.

Lorie Logan, president of the Dallas Fed, said after the report that she 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,” she said, according to CNBC.

On 28 October the Fed held its target range at 3.75% to 4% by a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favour of a hike. A quarter-point move in December would take the range to 4% to 4.25%; a half point to 4.25% to 4.5%.

“This was the report the market could least afford to see,” Karen Manna of Federated Hermes told CNBC. Stocks fell after the release and Treasury yields rose.

The jobs report that started the move

The repricing began on Friday 6 November with the October jobs report. Payrolls rose by 165,000, the unemployment rate was 4.1% and average hourly earnings rose 0.4% in the month and 3.1% from a year earlier, 24/7 Wall St. reported. August and September were revised to gains of 186,000 and 60,000. San Francisco Fed President Mary Daly said the same day that the Fed would likely have to tighten further, though she favoured a “deliberate, gradual approach.”

CME FedWatch put the chance of a December hike at 76.8% that Friday, up from 66.9% a week earlier. Futures ended Monday pricing about 85%, Reuters reported. Tuesday’s CPI report took the prediction markets to about 95%.

A year of rising rates

The Fed is in a tightening cycle. It raised its target range by a quarter point on 16 September in a 12-0 vote, then held at 3.75% to 4% on 28 October, with two officials already voting for another hike. A December move would be the second increase in three meetings.

Polymarket’s separate market on another hike in 2026 is at 95.65%, almost exactly the combined December hike price of about 95%: December is the Fed’s last scheduled meeting of the year. Reuters reported on Monday that futures also priced a better-than-even chance of a further hike by March.

How the CPI markets did

Kalshi’s CPI markets expected a cooler report. The evening before, its ladder put the most likely headline reading at 0.3%, with about a 37% chance, and 0.4% at about 19%. For core, it had 0.2% at about 48% and 0.3% at about 33%. Both readings came in one notch above the market’s middle estimate, and both ladders settled on Tuesday: “Above 0.3%” paid out on headline CPI and “Above 0.2%” on core.

That is unusual. In our study of 72 earlier reports, Kalshi’s CPI markets more often erred the other way, expecting more inflation than was published (how accurate Kalshi’s CPI markets are).

Polymarket’s market on the October annual rate, which had 3.7% at about 96%, was still open on Tuesday afternoon. With no official annual rate published, traders should check how its rules handle a missing figure before trading it (how to read market rules).

What comes next

• 13 November: producer prices for October.
• 18 November: minutes of the October Fed meeting.
• Later in November: the October PCE inflation report, the Fed’s preferred measure, which Logan said she is watching.
• 4 December: November jobs report.
• 8-9 December: the Fed meeting, with the decision and new projections on 9 December.
• 10 December: November CPI, with the annual rate restored.

Reaction in other markets

The report hit stocks. The S&P 500 was down more than 0.4% in Tuesday morning trading, with the Dow and the Nasdaq off by a similar amount, Fox Business reported. Shortly after the release, the Nasdaq-100 tracking fund QQQ was about 1% below Monday’s close, according to StockTitan. Treasury yields rose, CNBC reported.

On Kalshi, the market on where the rate ends up after the meeting tells the same story as the decision market. “Above 4.00%”, which needs at least a quarter-point hike, is at 97¢. “Above 4.25%”, which needs a half point or more, is at 10¢, in line with the 10.8% on Polymarket’s half-point bracket and the 13¢ on Kalshi’s “Hike >25bps”.

How the December markets settle

• Polymarket resolves on the change in the upper bound of the target range in the FOMC’s statement after the 8-9 December meeting. A move between brackets is rounded up to the nearest 25 basis points, so a 12.5 bp change would count as 25.
• Kalshi lists mutually exclusive outcomes for 9 December. A 50 bp hike settles “Hike >25bps” Yes and “Hike 25bps” No. If the meeting is cancelled, “Fed maintains rate” resolves Yes.

The fees are small on prices this extreme. Polymarket charges takers 5% × price × (1 − price) on this market, about 0.65¢ at 84.5¢; Kalshi’s standard fee is 7% × price × (1 − price), about 0.9¢ at 85¢ (fees compared).

How to read the prices

At 84.5¢ for a quarter point and 10.8¢ for a half point, the market is not debating whether the Fed hikes but by how much. A trader who thinks Waller’s argument will win over the committee would buy the half-point bracket at about 11¢; one who thinks a quarter point is the ceiling would buy 25 bp at 84.5¢ or sell the half point. The October PCE report and the minutes of the October meeting are the next pieces of evidence for either side.

FAQ

When is the next Fed meeting? 8-9 December 2026, with the decision on 9 December.

What are the odds of a Fed rate hike in December? About 95% on Polymarket after the October CPI report: 84.5% for 25 basis points and 10.8% for 50 or more.

What did Waller say? Speaking in London on 10 November, before the CPI report, he said he was leaning towards a 25 basis point hike in December and that a 50 basis point hike “should be considered” if October core inflation came in around 0.3% or higher. It came in at 0.3%.

Could the Fed hike by half a point? The markets give it about 11% on Polymarket and 13¢ on Kalshi. Waller’s argument and the next inflation data will decide it.

Why was there no annual inflation rate for October? The BLS did not collect enough October 2025 prices during the 2025 government shutdown, so it could not compute a 12-month change.

For how the December markets work, see how to bet on Fed rate decisions and when the next Fed meeting is. For how well these markets have called past decisions, see our Fed markets study.

Live prices: Fed decision in December on Polymarket, Kalshi’s December decision market and October CPI on Kalshi.

Prices as of the afternoon of 10 November 2026 (UTC). Sources: BLS figures as reported by CNBC, Fox Business and StockTitan; Reuters; Polymarket and Kalshi market data. Nothing here is financial advice.