Three Fed presidents line up behind a December rate hike

What happened

Three Federal Reserve bank presidents said on Thursday 12 and Friday 13 November that interest rates will likely have to rise, after the Consumer Price Index for October came in hot. ^{[2, 3, 4, 5]}

Boston Fed President Susan Collins told Bloomberg Television on Friday that 'soon some additional firming, tightening of policy is appropriate.' San Francisco Fed President Mary Daly said the same day: 'We're going to need to, in all likelihood, raise rates.' ^{[4, 2]}

New York Fed President John Williams said on Thursday that 'inflation is far too high.' He said the Fed will need to act 'over time' to bring it back to its 2 percent goal. ^[5]

Why it matters

The Fed's benchmark rate sits at 3.75 to 4 percent, and Reuters reported that markets are betting heavily on quarter-point hikes at the meetings of 8 to 9 December and 26 to 27 January. Collins said 'a bit of a tighter policy path than I had penciled in a couple of months ago might be appropriate.' ^{[2, 4]}

What the data show

The Bureau of Labor Statistics reported that the index increased 0.4 percent in October, core prices excluding food and energy 0.3 percent, and energy 0.7 percent. It said it cannot publish 12-month changes, because data for October 2025 are missing after a lapse in federal funding. ^[1]

Producer prices were up 6.5 percent over the year to October, the largest increase since 2022, Yahoo Finance reported. Daly said services inflation outside housing is 'not moving in the correct direction,' and that producers say they are running out of room to absorb costs in their margins. ^{[5, 2]}

Where officials differ

Speed is the open question. Governor Christopher Waller suggested earlier in the week that a half-point move was possible, Reuters reported. Collins said: 'I don't want to get ahead in terms of how high we should go or how fast.' ^[4]

At Stanford on Thursday, Daly said her bias is to tighten further, but that 'exactly how much and exactly when' depends on data over 'many, many quarters,' Reuters reported. It wrote that she did not join officials signaling bigger or faster hikes. ^[3]

What settles it next

The Fed's policy meeting on 8 and 9 December sets the next step, and financial markets also expect a hike in January, Reuters reported. Daly said she is watching whether consumers keep spending through the holiday season. ^{[4, 2]}

Who it reaches

Lennar (LEN) and D.R. Horton (DHI) are adjacent. Collins, speaking at a housing conference her bank hosted, said price stability is key to a healthy housing sector even if tighter policy means some near-term pain for it, Reuters reported. ^[4]