Will the Fed Raise Rates in December 2026? What the Strong October Jobs Report Means for Mortgages and Prices

If you pay a mortgage, carry a credit card balance, or are hoping your paycheck stretches further next month, the Federal Reserve's December decision will reach your budget more directly than most headlines coming out of Washington this week.

The short version is this: hiring in the United States came in far stronger than expected in October, while inflation is still running well above the Fed's 2 percent target. That combination has pushed the debate inside the central bank — and in financial markets — back toward one more interest rate increase on December 8-9, rather than a longer pause. Nothing has been decided yet, and one inflation report, due Tuesday, November 10, could still change the calculation.


A stronger-than-expected jobs report has put the Federal Reserve's December rate decision back in focus. (Symbolic generated image)

What happened in the October jobs report?

The U.S. Bureau of Labor Statistics (BLS) reported on Friday, November 6, that total nonfarm payroll employment rose by 165,000 in October 2026, and the unemployment rate changed little at 4.1 percent.

That headline number matters because of what forecasters had expected. According to reporting by Reuters, economists had expected a gain of roughly 59,000 to 65,000 jobs — so the actual result was more than twice the consensus. The surprise did not stop at October. BLS also revised the previous two months upward by a combined 84,000 jobs: August was revised up to 186,000 from 133,000, and September was revised up to 60,000 from 29,000.

Put together, employers added about 137,000 jobs a month on average over August, September and October — a sharp change from the average monthly gain of 48,000 over the prior 12 months that BLS itself noted in the same release.

Where did the jobs come from? BLS said employment increased in professional and business services (+70,000), health care (+42,000) and transportation and warehousing (+25,000). Manufacturing also added 19,000 jobs. Most other major industries, including construction, retail trade and leisure and hospitality, showed little change.

Pay, however, is not keeping up with prices. Average hourly earnings rose 0.4 percent in October to $38.00, and were up 3.1 percent over the year, according to BLS. That is below the most recent inflation reading of 3.7 percent, which means that, on average, wages are still losing ground in real terms even as hiring strengthens.

There was also a softer detail underneath the strong headline. BLS reported that the number of people working part time for economic reasons — people who wanted full-time work but could not get it, or whose hours were cut — rose by 339,000 to 4.8 million in October. That does not overturn the headline, but it is a reminder that a single strong month is not the whole labor market story.

Why is inflation still the deciding factor?

The Fed has two jobs under its dual mandate: maximum employment and stable prices. Right now, those two jobs are pulling in opposite directions, and prices are the problem side.

The most recent Consumer Price Index (CPI) report, for September 2026, showed consumer prices up 3.7 percent over the 12 months to September, up from 3.4 percent in August, according to BLS. Prices rose 0.6 percent in September alone. Core CPI — which strips out food and energy — was up 2.6 percent over the year, so a large part of the headline increase came from energy. BLS said the gasoline index rose 9.1 percent in September and accounted for over half of the monthly increase in all items.

That gap between headline inflation (3.7 percent) and core inflation (2.6 percent) is important for how to read December. If energy is doing most of the damage, the Fed has to judge whether an energy-driven spike will fade on its own or whether it will feed into broader prices, rents and services. Different outlets have emphasized that distinction differently: some coverage has focused on the 3.7 percent headline as proof that inflation is re-accelerating, while data-focused coverage has stressed that core prices, at 2.6 percent, are much closer to the Fed's target. Both numbers are from the same BLS release — they answer different questions.

The next CPI report, for October, is scheduled for release on Tuesday, November 10 at 8:30 a.m. Eastern Time, according to BLS. Several analysts quoted in market coverage have described it as the last inflation reading the Federal Open Market Committee (FOMC) will see before it votes in December, because the November CPI is not due until December 10 — after the meeting ends.

For background on why voters ranked prices so highly this fall, see our earlier explainer: Democrats win control of both chambers in 2026 US midterms — cost of living was the issue that dominated that election, and it is the same pressure now sitting in front of the Fed.

What did the Fed actually decide in October?

On October 28, 2026, the Federal Open Market Committee decided, by a 10-2 vote, to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, according to the Fed's own FOMC statement.

Two details in that short statement explain why December is live. First, the statement said, in its own assessment, that economic activity is expanding at a strong pace and that inflation remains elevated. Second, the two dissenters — Lisa D. Cook and Beth M. Hammack — voted against holding because they preferred to raise the target range by a quarter percentage point at that meeting, according to the statement. In other words, the split in October was not between hiking and cutting. It was between holding and hiking.

Context matters here. In September, the committee had raised the range by a quarter point to its current 3.75 to 4.00 percent level — its first increase since 2023, according to multiple reports of the September decision. October was therefore a pause after a hike, not the start of an easing cycle. At his October press conference, Chair Kevin Warsh said policymakers would be watching for "the accumulation of data" to decide whether more tightening would be needed, according to Reuters reporting of his remarks.

October's jobs report is exactly the kind of data accumulation Warsh described — and, for several policymakers who have spoken since, it pointed in one direction.

What are Fed officials and markets saying now?

According to Reuters reporting on November 6, San Francisco Fed President Mary Daly said after the jobs report that she expects the central bank will have to tighten policy further, and that inflation has to be the number one priority. Daly is not a voting member of the FOMC this year, a point Reuters and CNBC both noted, but her views are closely watched as a signal of the committee's center of gravity.

St. Louis Fed President Alberto Musalem, speaking at a civic event in St. Louis on Friday, said inflation remained the top concern in his conversations with businesses in his district, according to the same Reuters reporting. Musalem has previously advocated for further rate increases — that is his stated position, reported as such, not a decision the committee has taken.

Markets moved quickly. Reuters reported that traders were pricing about a 78 to 80 percent chance of a quarter-percentage-point increase at the December 8-9 meeting after the jobs report, up from about 67 percent on Thursday, before the data. The exact figure varied slightly by source and by the time of day — one market summary put CME FedWatch odds at 78.6 percent on Saturday — but the direction was the same in every report checked for this article: the jobs data raised, rather than lowered, the expected odds of a December hike.

Not everyone agrees that a hike is settled. Some analyst commentary cited in market coverage, including from Bloomberg Economics, still expects a hold, arguing that tighter financial conditions after a recent stock market sell-off are already doing some of the Fed's work for it. That disagreement is worth keeping in view: a market probability of roughly four in five is a strong lean, not a promise, and it has already swung by more than ten points in a single week.

Key points

  • Jobs: +165,000 in October, unemployment 4.1 percent — BLS, November 6, 2026
  • Revisions: August and September revised up by a combined 84,000 jobs — BLS
  • Pay: Average hourly earnings +3.1 percent over the year, below 3.7 percent inflation — BLS
  • Inflation: CPI +3.7 percent over the year to September; core CPI +2.6 percent — BLS
  • Current rate: Federal funds target range 3.75 to 4.00 percent, held October 28 by a 10-2 vote — Federal Reserve
  • Next decision: December 8-9, 2026, with new Fed economic projections — Federal Reserve
  • Mortgages: 30-year fixed averaged 7.18 percent in the week to November 5 — Freddie Mac






Mortgage rates have eased for three weeks, but a December hike could stall that relief. (Symbolic generated image)

Why does this matter for your mortgage, savings and job?

Start with borrowing. Freddie Mac's Primary Mortgage Market Survey put the average 30-year fixed-rate mortgage at 7.18 percent as of November 5, down from 7.24 percent the week before — a third straight weekly decline, according to Freddie Mac's release summary. A year ago, the same average was 6.22 percent. Mortgage rates do not move in lockstep with the Fed's overnight rate — they follow longer-term Treasury yields more closely — but a December hike, or even a strong signal that more hikes are coming in 2027, would make it harder for that three-week easing trend to continue.

For savers, the other side of the same coin applies: higher policy rates tend to support higher yields on savings accounts and money market funds, though individual banks pass those changes through at very different speeds. For workers, the October report is genuinely good news on job availability — hiring at 165,000 with unemployment at 4.1 percent is not a labor market in trouble — even if the pay-versus-prices squeeze, 3.1 percent wage growth against 3.7 percent inflation, explains why a strong jobs number does not automatically feel like relief at the grocery store.

For readers in Canada, there is a spillover worth noting without overstating it: U.S. rates influence global bond yields, the U.S. dollar, and the borrowing conditions Canadian households and businesses face, even though the Bank of Canada sets its own policy independently. No Canadian decision is being made on December 8-9 — only the context around it may shift.

What to watch

  • [ ] Tuesday, November 10 — October CPI: Is headline inflation still near 3.7 percent, and is core still near 2.6 percent? A hot print strengthens the hike case; a soft print revives the hold case.
  • [ ] Fed speeches before December: Do voting members echo Daly and Musalem on prioritizing inflation, or do they stress the softer details, such as part-time work for economic reasons?
  • [ ] Thursday Freddie Mac surveys: Does the 30-year mortgage average keep falling from 7.18 percent, or does it turn back up as December odds rise?
  • [ ] Friday, December 4 — November jobs report: A second strong month would make a pause harder to justify; a weak month would reopen the debate.
  • [ ] December 8-9 — FOMC decision and new projections: The rate decision itself, and the Fed's updated forecast for where rates go in 2027, will matter as much as the December move.

This is an explainer, not financial advice. A December decision has not been made, market odds change with every data release, and your own mortgage or savings quote will depend on your lender, credit profile and timing — not on a national average.

If you are planning a big purchase, a move, or a mortgage renewal in the next few months, which matters more to your budget right now — feeling secure in your job, or the cost of borrowing?

Sources:

댓글

댓글 쓰기

이 블로그의 인기 게시물

Enceinte au Canada ? Que faire en premier — Guide de préparation à la grossesse, partie 1 (suivi prénatal en Colombie-Britannique)

이미지
Si vous êtes enceinte — ou si vous prévoyez de l'être — au Canada, les premières étapes sont plus simples qu'elles en ont l'air : confirmez votre couverture maladie, choisissez dès que possible le professionnel qui assurera votre suivi de maternité, et suivez un calendrier régulier de visites et de tests prénataux. En Colombie-Britannique, les soins de grossesse et d'accouchement médicalement nécessaires sont couverts par le MSP (le régime provincial d'assurance maladie) pour les personnes qui y sont inscrites, et les sages-femmes autorisées sont aussi entièrement couvertes. Cette première partie de notre série vous guide dans la préparation avant la grossesse, les démarches à faire juste après un test positif et une liste de contrôle trimestre par trimestre pour ne rien oublier d'important. 📚 Grossesse au Canada — série en 3 parties Partie 1 (Préparation) : cet article Partie 2 (Hôpital et accouchement) : lire la partie 2 Partie 3 (Prestations de maternité) : ...
자세한 내용 보기

Will the US Lose Its Measles Elimination Status? What the PAHO Review Actually Decides

이미지
If your child brings home a school health form this month, the question behind it — is this classroom protected against measles? — is now, unusually, also a question being decided about the entire United States. Here is the short version. From November 10 to 13, 2026, an independent expert commission convened by the Pan American Health Organization (PAHO) is holding its sixth annual meeting in Washington, D.C., and one of its tasks is to review whether the United States still qualifies as a country that has eliminated measles — a status it has held since 2000. The U.S. Centers for Disease Control and Prevention (CDC) counted 5,182 confirmed measles cases in 2026 as of November 5, the highest annual total in more than three decades, according to the CDC and Reuters. No decision has been announced yet. The commission sends its conclusions to PAHO's director, and CDC Director Dr. Erica Schwartz told Reuters she expected a decision by early next week; KFF Health News, summarizing New ...
자세한 내용 보기

Prestations de maternité et parentales de l'assurance-emploi au Canada : comment faire sa demande, combien vous recevrez — partie 3 (montants 2026)

이미지
Si vous travaillez au Canada et cotisez à l'assurance-emploi (AE), vous pouvez habituellement recevoir des prestations de maternité de l'assurance-emploi pendant un maximum de 15 semaines, à raison de 55 % de votre rémunération hebdomadaire assurable moyenne, jusqu'à un maximum de 729 $ par semaine en 2026, suivies de prestations parentales que vous pouvez partager avec votre partenaire. Séparément de l'argent, la loi de la Colombie-Britannique protège votre emploi pendant votre absence — un congé de grossesse pouvant aller jusqu'à 17 semaines, plus un congé parental pouvant aller jusqu'à 61 semaines après celui-ci, sans durée minimale de service requise auprès de votre employeur. Cette dernière partie de notre série explique les deux systèmes côte à côte, présente les montants de 2026 avec des exemples chiffrés et vous guide dans la demande, étape par étape. 📚 Grossesse au Canada — série en 3 parties Partie 1 (Préparation) : lire la partie 1 Partie 2 (Hôpital ...
자세한 내용 보기