(Finance) – Today’s data on US inflation, for the month of July, consolidates expectations that the Federal Reserve could suspend further interest rate hikes at its September meeting, giving way to a less aggressive monetary policy.
In July, consumer prices in the United States rose in line with expectations by 0.2% on a monthly basis, while the annual figure rose by 3.2%, less than expected (+3.3%).
“The data is compatible with theFed pause hypothesis in September” – analysts report from Intermonte – recalling that in any case, before the September meeting of the Fomc, the monetary policy committee of the Federal Reserve, another data on inflation will be published, that of August.
“At the July Fed meeting, Jay Powell said there were only two inflation numbers to go before deciding whether or not to hike rates at the next September meeting,” he recalls. Nick Chatters, investment manager at Aegon AM -. “Today’s US inflation data they will make the FOMC hawks realize that inflation is going down the same way it went up, so there is no need for a rate hike in September. With a CPI of 3.2% in July, inflation is not picking up again as feared,” he adds.
According to Richard Flax, Chief Investment Officer of Moneyfarm, “the likelihood of the Fed raising rates has decreased today and we are already seeing it reflected in the markets: stock futures are up while two-year Treasury yields and the dollar are both down.” After two consecutive data on inflation lower than expected – he explains – some investors are perhaps too optimistic to expect a rate cut in the first quarter of 2024. We’re likely to hear a lot about the Fed’s reliance on data, given its caution about talking too soon about winning.”