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HomeBusiness NewsFinanceHow will US inflation data affect the September Fed meeting?

How will US inflation data affect the September Fed meeting?


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Analyst Chat Talking Points:

  • The US inflation rate is not coming down as fast as was expected.
  • Markets are now fully pricing in the 75-bps rate hike at the September Federal Reserve meeting.
  • US stocks have fallen sharply, while the US dollar has recovered almost all of its recent losses.

The August US CPI report had a significant impact on financial markets on Tuesday – the US dollar rose, gold prices fell and US stocks fell sharply.

Headline US inflation rose +0.1% m/m and +8.3% y/y, top forecast for no gains m/m and +8.1% y/y growth. Core readings were warmer than expected, coming in at +0.6% m/m versus +0.3% forecast, and y/y +6.3% versus +6.1% expected.

Markets are now discounting 100% chances of a 75-bps rate hike by the Federal Reserve next week. There is also a 20% chance of a 100-bps rate increase. This is a significant increase from a month ago, when there was less than a 50% chance of a 75-bps rate increase and a 100-bps rate hike with a 0% chance.

What does the August US inflation report mean for the September Federal Reserve rate decision? Senior strategists James Stanley and Christopher Vecchio, CFA discuss in this Tuesday’s DailyFX Analyst Chat.

Recommended by James Stanley

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— Written by James Stanley and Christopher Vecchio, CFA, Senior Strategists



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