Nov 11, 2026 · 17 min
Hot inflation complicates the Fed’s December rate decision
Does hot inflation justify a 50-basis point December rate hike?
The inflation surprise could keep Treasury yields and mortgage rates elevated while the Federal Reserve weighs a smaller or larger December hike.
- 1Logan Mohtashami expects a 25-basis-point December hike, not the 50-basis-point move Christopher J. Waller raised publicly.
- 2Tariffs, energy costs, geopolitical conflict and labor data have made the 10-year yield unusually difficult to forecast.
- 3Sub-7% mortgage rates remain possible, but the timeline has become harder and may depend on changes extending into 2027.
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Logan Mohtashami rejects a 50-basis-point December move and instead predicts a 25-basis-point hike, while acknowledging the unusually uncertain outlook.
The brief
Sarah Wheeler and Logan Mohtashami examine a hotter-than-expected inflation report and its immediate implications for mortgage rates, Treasury yields and the Federal Reserve’s December meeting.
Christopher J. Waller’s suggestion that a 50-basis-point hike could be considered pushed the 10-year yield higher, but Logan questions whether the signal reflects policy or internal maneuvering.
Logan expects a 25-basis-point December hike, followed potentially by one more, while tariffs, oil, war, artificial intelligence and labor data cloud the yield outlook.
The hotter data weakens the near-term case for sub-7% mortgage rates, though ending the conflict and repealing tariffs could create a path toward lower rates, especially in 2027.
The conversation closes by honoring Veterans Day and recognizing veterans and housing professionals involved in helping service members obtain homes.
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