Fed watchers got more than they bargained for this week. A hotter-than-forecast October inflation report collided with Fed Governor Christopher Waller’s suggestion that a half-point hike should be on the table in December, and prediction markets reacted within minutes: pushing the odds of some size of increase to 97% and sending Bitcoin into a brief tailspin.
October CPI Rises 0.4%, Above Forecasts: What the Report Showed
October’s Consumer Price Index rose 0.4% from the month before, ahead of the 0.3% economists had forecast, though down from September’s 0.6% jump. Core prices, which leave out food and energy, climbed 0.3% for a third straight month: the same pace Waller had named as the threshold that would put a half-point move in play.
The report skipped an annual comparison altogether, since last year’s lengthy government shutdown left the Bureau of Labor Statistics without complete October 2025 data to measure against.
Economists pointed to a mix of forces behind the hotter print: shelter, still the single biggest piece of the index; energy prices pushed up by the ongoing war in Iran; the lingering effect of tariffs on goods like furniture and appliances; and higher electricity and chip costs tied to the buildout of AI data centers. “It’s uncomfortably high,” Moody’s chief economist Mark Zandi said of the report, adding that it made a December increase more likely.
Waller Says a 50 Basis Point Hike Should Be Considered
Fed Governor Christopher Waller said the Central Bank should weigh a half-point increase next month if inflation kept running hot, arguing that a quarter-point move alone could raise doubts about the Fed’s commitment to getting prices under control.
His comments came about 2 weeks after the Fed’s October 28 meeting, where officials held rates steady in a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack both wanted to raise rates already at that meeting.
Fed December Hike Odds Today: 25 Basis Points vs. 50
Prices moved fast once the CPI report hit. On Polymarket, the half-point contract climbed from 5.5% before the release to 12.5% within a few hours. Kalshi put the odds of any hike at all at 97%.
| Outcome | Kalshi | Polymarket US |
| 25 bp hike | 86% | 86% |
| 50+ bp hike | 12% | 11.8% |
| No change | 4% | 3.6% |
Both venues now agree on the shape of the outcome, even if the exact cents differ: a quarter-point move remains the clear favorite, but the half-point outcome went from an afterthought to a real possibility in a single trading session. Kalshi already prices in a 94% hike for the January 26-27 meeting and 92% for March, suggesting markets see December as the start of a run, not a one-off.
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Treasury Yields, Stocks and Bitcoin React
Bitcoin took the sharpest hit. It had been trading above $74,000 before the report, then fell to an intraday low of $72,787, according to Bitstamp data. More than $632 million in crypto positions were liquidated in 24 hours, Coinglass figures showed, with roughly $511 million of that coming from long positions: about $169 million in Bitcoin and nearly $240 million in Ether.
By Tuesday, Bitcoin had stabilized in the $73,500 range, still down slightly on the day. Stocks and bond yields also moved on the report, part of a broader reassessment of how far the Fed still has to go this cycle.
What’s next: the Dec. 9 meeting and November CPI on Dec. 10
The Fed meets December 8 and 9, with the decision due at 2 p.m. ET on the 9th. November’s CPI report doesn’t land until December 10: the day after.
That means policymakers will make this call without any fresh inflation data beyond what they already have from October.
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