hello dear traders
Federal Reserve likely to pause
The US inflation report made headlines as inflation fell from 4.9% to 4.0%. That was of course good news, but not the whole story. The drop in headline inflation was primarily due to lower food and energy prices, as the core rate decline was modest – from 5.5% to 5.3%. Core CPI levels remain incompatible with a 2% inflation target, which means that more rate hikes could be on the way after today’s expected pause.
The markets have priced in a pause at close to 100%, meaning it would be a stunner if the Fed raised rates. Still, with Fed members split on whether to pause or continue hiking, Jerome Powell could choose the middle path and deliver a ‘hawkish skip’, whereby the Fed takes a breather but sends out the message that the current tightening cycle is not over. The Fed decision is likely a foregone conclusion, but the rate statement and Powell’s follow-up remarks will be a must-watch.
good luck
Federal Reserve likely to pause
The US inflation report made headlines as inflation fell from 4.9% to 4.0%. That was of course good news, but not the whole story. The drop in headline inflation was primarily due to lower food and energy prices, as the core rate decline was modest – from 5.5% to 5.3%. Core CPI levels remain incompatible with a 2% inflation target, which means that more rate hikes could be on the way after today’s expected pause.
The markets have priced in a pause at close to 100%, meaning it would be a stunner if the Fed raised rates. Still, with Fed members split on whether to pause or continue hiking, Jerome Powell could choose the middle path and deliver a ‘hawkish skip’, whereby the Fed takes a breather but sends out the message that the current tightening cycle is not over. The Fed decision is likely a foregone conclusion, but the rate statement and Powell’s follow-up remarks will be a must-watch.
good luck