Macro
Fed Officials Press the Case for More Rate Hikes After Hot Core Inflation as Goldman Adds a March Increase
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Waller, Logan, Paulson and Goolsbee all signaled concern, while futures treat a December quarter-point hike as essentially locked in.
By Emma Cruz ·
A string of Federal Reserve officials made the case for further interest rate increases on Tuesday and Wednesday, Nov. 10 and 11, after October's core inflation reading came in hotter than economists expected, and markets now treat a December hike as nearly certain while debating whether the central bank might move by more than a quarter point [1][2].
Core U.S. consumer prices, which exclude food and energy, rose 0.3% from the previous month in October, above the 0.2% forecast, Reuters reported [1]. Fed funds futures show a quarter-point increase in December as essentially priced in, with about a 10% chance of a half-point move, and three quarter-point hikes are fully priced by the middle of next year, according to the same report [1].
The officials' comments leaned in one direction. Governor Christopher Waller said a core reading of 0.3% would lead him to consider backing a 50 basis point hike at the December meeting, Reuters said [1]. Dallas Fed President Lorie Logan said two more increases are needed and could come quickly, while Philadelphia Fed President Anna Paulson favored continuing with gradual hikes [1]. Chicago Fed President Austan Goolsbee warned of a "real inflation issue" [1].
Goolsbee went further in a PBS NewsHour interview, calling the October report "borderline disturbing," according to investingLive [2]. He said services inflation is not easing, described a risk of overheating across a broad range of prices, and said it would be a serious concern if inflation became built into expectations, adding that every option remains on the table [2]. Michelle Bowman, the Fed's vice chair for supervision, said she was shifting her focus toward inflation, the same outlet reported [2].
Wall Street research is moving the same way. Reuters reported that Goldman Sachs chief U.S. economist David Mericle added a third quarter-point hike, in March 2027, to his forecast, which would take the federal funds rate to a peak of 4.25% to 4.5% [1]. Forecasts of this kind are the opinions of individual banks, not Fed policy, and the Fed decides rates collectively through its policy committee.
Markets absorbed the message unevenly. The two-year Treasury yield jumped 18 basis points on Tuesday and added about 2 basis points more in Asia on Wednesday to 4.7482%, while the 10-year yield rose to about 4.9958%, Reuters reported [1]. U.S. Treasury markets were closed on Wednesday for the Veterans Day holiday, according to a separate Reuters report [3]. The dollar index rose 0.3% to about 102.5, a four-week high, and gold recovered 0.4% to $4,047 an ounce after dropping 2.6% in the prior session, Reuters said around midday in Europe [3].
Equities, by contrast, were buoyed by strong results from CoreWeave. Reuters said Nasdaq futures were up 2% and S&P 500 futures up 0.9% around midday in Europe, with the pan-European STOXX 600 up 0.3%, as investors focused on renewed optimism about artificial intelligence rather than rate expectations [3]. That divergence between falling bond prices and rising tech shares is one of the tensions in the market: higher policy rates raise borrowing costs and reduce the present value of future earnings, which has typically pressured growth stocks.
For the Fed itself, the open questions are the size and speed of the tightening path. Several officials have framed the next move as a quarter point with a larger step possible, depending on incoming data. Things to watch include whether more policymakers endorse a 50 basis point increase, how Treasury yields behave when U.S. bond trading resumes, and whether services inflation, which Goolsbee singled out, shows any sign of cooling in the next price reports.
Sources:
[1] Reuters (via Yahoo Finance), "Stocks rally as CoreWeave soothes, bonds reel on rate hike fears", November 10, 2026. https://finance.yahoo.com/economy/policy/articles/bonds-reel-hot-inflation-fuels-020451336.html
[2] investingLive, "Fed's Goolsbee calls CPI 'borderline disturbing', flags three inflation worries", November 10, 2026. https://investinglive.com/central-banks/fed-s-goolsbee-calls-cpi-borderline-disturbing-flags-three-inflation-worries/
[3] Reuters (via Kitco News), "Tech lifts world stocks as CoreWeave revives AI trade", November 11, 2026. https://www.kitco.com/news/off-the-wire/2026-11-11/tech-lifts-world-stocks-coreweave-revives-ai-trade
This article was produced with AI assistance. It is for informational purposes only and is not financial advice. StockVolt and its authors may hold positions in securities mentioned.