U.S. nonfarm payrolls increased by 165,000 in October, far exceeding the consensus forecast of 65,000, while the unemployment rate fell to 4.1%. Futures markets now put the probability of a 25-basis-point Federal Reserve rate hike in December at 76% to 79%, up from about two-thirds before the report was released. The Fed’s current target range for the federal funds rate is 3.75% to 4.00%, following its last increase in September. Future inflation data, statements by Chair Jerome Powell and updates to the Federal Open Market Committee’s projections could shift these expectations and provide insight into the possibility of further rate hikes in 2026.
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