Traders sharply increase expectations of Federal Reserve tightening after U.S. consumer prices rise faster than forecast, with larger rate hikes also gaining traction.Prediction market Polymarket priced an approximately 85% probability of a 25-basis-point Federal Reserve interest rate increase in December following stronger-than-expected U.S. inflation data released on November 10, 2026. The platform’s December Federal Open Market Committee (FOMC) market assigned roughly 85% odds to a quarter-point hike, while contracts covering increases of 50 basis points or more attracted approximately 11% to 13%.
Together, the outcomes implied that traders viewed additional monetary tightening as overwhelmingly likely at the Fed’s December 8–9 meeting. The shift followed October’s Consumer Price Index (CPI) report, which showed headline consumer prices increasing 0.4% month over month, exceeding economists’ 0.3% forecast. Core CPI, which excludes food and energy, rose 0.3%, also above expectations of 0.2%. The stronger readings reinforced concerns that inflation remains persistent despite previous interest rate increases, complicating the Federal Reserve’s efforts to restore price stability.
October Inflation Data Pushes Rate Hike Expectations Higher
The Bureau of Labor Statistics reported that consumer prices increased 0.4% in October after rising 0.6% in September. Shelter costs rose 0.3%, accounting for more than 30% of the overall monthly increase. Food prices climbed 0.5%, while energy costs advanced 0.7%. Core inflation increased 0.3% for the third consecutive month, indicating that underlying price pressures remain persistent across several sectors.
The October report did not include a conventional annual inflation comparison because the 2025 federal government shutdown prevented the collection of some October 2025 price data. Following the release, Polymarket’s probability of a 25-basis-point December hike increased approximately six percentage points over 24 hours, reaching 85.5% by early November 11. The probability of a larger increase climbed above 10%, while unchanged rates were assigned approximately 3.5%. The December contract had accumulated nearly $25 million in trading volume, illustrating substantial participation in expectations surrounding the Fed’s next decision. These percentages represent prices implied by prediction market trading rather than an official Federal Reserve forecast.
Bitcoin Faces Pressure as Treasury Yields Rise
The inflation figures also affected traditional financial markets, with U.S. Treasury yields and the dollar strengthening as investors reassessed the likely path of interest rates. Reuters reported that interest rate futures were pricing an almost certain December increase, broadly consistent with Polymarket’s positioning. Federal Reserve officials also acknowledged the possibility of faster tightening. Governor Christopher Waller had indicated that sufficiently persistent inflation could justify consideration of a larger December increase. Dallas Fed President Lorie Logan suggested that additional tightening might be necessary, while other policymakers cautioned against overlooking risks to economic growth.
Cryptocurrency markets faced renewed pressure as expectations of higher borrowing costs reduced investor appetite for speculative assets. Bitcoin traded around $74,500 following the inflation release, after briefly declining toward $73,600, according to market data cited by crypto.news. Higher interest rates can increase the relative attractiveness of yield-bearing investments and tighten financial conditions, potentially weighing on cryptocurrencies and other risk-sensitive assets. The Fed’s December meeting will include updated economic projections, offering policymakers an opportunity to communicate their expectations for inflation and future interest rates. November inflation figures are scheduled for December 10, one day after the policy decision, meaning officials will not have that report when determining December’s rates. While prediction markets strongly favor another increase, the final decision remains dependent on incoming economic evidence and the Federal Reserve’s assessment of inflation and employment conditions.