Federal Reserve: December rate hike expectations reinforced – Commerzbank

Commerzbank’s Dr. Christoph Balz has stated that persistent US inflation continues to pressure the Federal Reserve to tighten monetary policy further. According to the report, Federal Reserve Governor Christopher Waller has suggested a 25-basis-point hike in December, with the possibility of a 50-basis-point increase under certain conditions.

Commerzbank anticipates another 25-basis-point rate rise at the upcoming Federal Open Market Committee (FOMC) meeting in December. Fed Governor Waller emphasized in a recent speech that if the core monthly inflation rate exceeds 0.3%, a 50-basis-point hike should be considered, although he acknowledged that such a drastic move may not garner majority support on the committee.

The report suggests that the current inflation figures, coupled with low unemployment and a strong economy, may necessitate more than the single rate hike implemented in September to effectively bring inflation under control.