With the U.S. August CPI report due in about one hour, markets are closely watching the data for clues on the Federal Reserve’s September decision. According to CME FedWatch, traders currently assign a 69.4% probability to a 25-basis-point rate hike this month, while the odds of no change stand at 30.6%. The next Fed rate decision is scheduled for Sept. 16, or 2:00 a.m. Beijing time on Sept. 17.
The U.S. Labor Department is set to release the August CPI report at 20:30 Beijing time. Market expectations point to headline CPI rising 0.4% month over month and 3.4% year over year. Core CPI is expected to increase 0.2% month over month and 2.4% year over year. The core monthly reading is drawing particular attention because it could shape pricing around the Fed’s next move.
BlockBeats noted that the data may determine whether the Fed begins its first rate-hike move in more than three years. The central bank last raised rates on July 26, 2023, when it lifted the federal funds target range by 25 basis points to 5.25%-5.50%.
The U.S. August consumer price index report is due in about one hour, and the release may influence whether the Federal Reserve starts its first rate hike in more than three years, according to BlockBeats on Sept. 11.
CME FedWatch data shows a 30.6% probability that the Fed will leave rates unchanged this month, versus a 69.4% probability of a 25-basis-point hike.
Next Fed decision set for Sept. 16
The Federal Reserve’s next rate decision is scheduled for Sept. 16, which falls at 2:00 a.m. Beijing time on Sept. 17.
The U.S. Department of Labor will release the August CPI data at 20:30 Beijing time. Market estimates call for headline CPI to rise 0.4% month over month and 3.4% year over year. Core CPI is expected to increase 0.2% month over month and 2.4% year over year.
Core monthly CPI reading in focus
The inflation report is seen as an important reference point for whether the Fed moves next week. The Fed last raised rates on July 26, 2023, delivering a 25-basis-point increase that brought the federal funds target range to 5.25%-5.50%.
Markets are paying especially close attention to the core CPI month-over-month figure. According to the analysis cited in the source, a 0.2% increase could leave room for the Fed to keep rates unchanged, while a 0.4% reading could more clearly push policy expectations toward a hike. If the figure comes in at 0.3%, traders may look more closely at the unrounded data as well as components including housing, services, and core goods.
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