October PPI Data Lifts December Quarter-Point Fed Hike Odds to 91%

U.S. producer inflation rose less than expected in October, prompting money markets to raise the implied chance of a quarter-point Federal Reserve rate increase in December to 91%.

The implied probability of a 25-basis-point increase rose to 91% from 86% before the release. The chance of a 50-basis-point move fell to 9% from 14%.

The October producer-price report showed a 0.3% increase from September, below the 0.4% forecast. Its annual increase was 6.5%, compared with a 6.6% forecast. Both readings came in 0.1 percentage point below expectations.