The Federal Reserve will meet at the end of the month and decisions could be made. Its president remains cautious.
Those responsible for monetary policy United States Federal Reserve (Fed) Fed officials received a signal Wednesday that inflation is back on track toward its 2 percent target as a government report showed consumer prices unexpectedly fell in June, bolstering the case for a September interest rate cut.
He Consumer Price Index (CPI) fell 0.1% last month, the Ministry of Finance reported Thursday. Department of Labor Bureau of Labor Statisticsafter remaining unchanged in May, while the year-on-year increase cooled to 3%, the lowest figure in a year.
Traders were quick to react, pricing in an 85% chance of a rate cut in September following the report, up from 70% previously expected, and also increasing bets on a second rate cut in December.
On the other hand, the chances of a third rate cut by the Federal Reserve by the end of the year have increased, although they are still less than 50%. “If we get another good inflation report in August, I think we could see at least two rate cuts this year, possibly three,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
The next meeting of the Federal Reserve will be later this month, and traders see less than a 10% chance of a rate cut then. Fed Chairman Jerome Powell said Tuesday that inflation data at this point did not give him confidence to cut rates yet, but that the central bank would do so when necessary.
Source: Ambito
