Wall Street is bracing for the Federal Reserve to raise interest rates again next month, with market pricing now putting the odds of a December hike at roughly 76% under new Fed Chair Kevin Warsh's increasingly divided committee.

The Federal Open Market Committee voted 10-2 to hold its benchmark rate steady at 3.75% to 4% at its October meeting, with governors Lisa Cook and Beth Hammack dissenting in favor of an immediate quarter-point increase. That split followed a September meeting at which the committee had already lifted rates a quarter point to that range — the Fed's first hike since 2023 — a move CNBC reported came after several officials signaled they wanted to get ahead of persistent inflation pressure.

A hawkish committee under a new chair

Warsh was sworn in as the Fed's 17th chairman in May, succeeding Jerome Powell after years of criticism from Warsh over the central bank's pace of rate cuts following the 2008 financial crisis. Since taking the gavel, Warsh has steered the committee toward a more hawkish posture than many investors expected, insisting the Fed remains committed to bringing inflation back to its 2% target rather than shifting toward faster easing, according to the Federal Reserve's own September policy statement.

TRADERS NOW SEE ROUGHLY A 3-IN-4 CHANCE OF A DECEMBER HIKE

The Fed's next policy meeting is scheduled for December 9, and interest-rate futures markets are pricing in about a 76% probability of another quarter-point increase, with a smaller but notable chance of two or more hikes carrying into 2027. The hawkish drift marks a sharp reversal from the rate-cutting cycle that dominated the past two years, and it comes as the broader stock market has whipsawed in recent weeks on worries about AI-related data-center spending and stretched valuations in tech shares.

For borrowers, the stakes are immediate: mortgage rates, credit card APRs and small-business lending costs have already climbed off their 2025 lows, and a confirmed December hike would push them higher still heading into the new year. For the White House, which has repeatedly pushed back on the Fed's rate decisions this year, a further tightening move would set up fresh friction with a central bank Warsh has insisted on running independently of political pressure.

Markets will get another read on the committee's thinking when the Fed releases minutes from its October meeting in the coming weeks, offering a fuller account of the Cook-Hammack dissent and how close the rest of the committee came to joining them.