Brown Brothers Harriman (BBH) reports that stronger US inflation data and hawkish comments from several Fed officials have shifted market focus toward the size of a December rate hike.

Officials stress persistent inflation risks

“The US inflation surprise shifted the FOMC December rate debate from whether to hold or hike 25bps to a choice between a 25bps or 50bps hike. Indeed, Fed funds futures moved to price-in as much as 15% odds of a 50bps increase on December 9. That hawkish shift bodes well for USD.”

“Dallas Fed President Lorie Logan (2026 FOMC voter) remarked “given the current outlook, that the FOMC needs to implement at least two more 25-basis-point rate increases…It may be possible to move more rapidly this winter than the FOMC has moved so far this fall.””

“Fed Vice Chair for Supervision Michelle Bowman also struck a hawkish tone noting “I am seeing signs that inflation pressures are persisting, while labor market conditions appear to be firming. This indicates that there is still work to do to bring inflation closer to 2 percent.””

“Finally, Philadelphia Fed President Anna Paulson (2026 FOMC voter) was more cautious. Paulson said “I would want to act more quickly if inflation expectations drift up, if wage pressures build, or if underlying inflation moves higher…Right now, that’s not what I’m seeing.””