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A December rate increase remains the market’s expected outcome. Investing.com’s rate monitor put the probability of a quarter-percentage-point increase at about 80% on 4 November. Another hold would depart from that expectation, making the evidence that might persuade the Federal Reserve to wait particularly relevant for traders. The Fed raised its benchmark rate to 3.75–4% in September and left it unchanged on 28 October. Dallas Fed President Lorie Logan supported the hold, then argued two days later for at least two more quarter-point increases. Her position illustrates how officials can favour further tightening while allowing more time between decisions. A similar pause came in June 2023, when the Fed held rates to assess incoming information and earlier tightening before raising them again in July. This time, the case for waiting depends on whether inflation continues to ease and subdued hiring develops into broader employment weakness. Inflation Has Eased Unevenly The Personal Consumption Expenditures (PCE) price index rose 3.6% between September 2025 and September 2026, above the Fed’s 2% annual inflation target. Prices excluding food and energy, known as core inflation, increased 0.3% in both August and September 2026. Across the third quarter of 2026, however, core inflation slowed to an annualised 2.5%, from 3.3% in the second quarter. These figures express each quarter’s price increases as an annual rate. They show improvement over the broader period, while the latest monthly readings leave its durability open to question. Energy prices add uncertainty. EBC analyst Edgar Peredo identifies disruption around the Strait of Hormuz as a potential source of persistent inflation, as higher fuel costs feed into transport and production. Oil nevertheless fell more than 8% on 4 November as investors assessed prospects for Middle East peace following the US elections. Democrats won both chambers of Congress and will take control in January. The result prompted…

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