Tom Essaye, founder of Sevens Report Research, emphasized the significance of today’s report, stating, “Wednesday’s CPI could be the deciding factor in whether the Fed decides to cut 50 bps [next] week or 25 bps.” He added that weaker numbers would generally be better for markets and increase the chances of a larger rate cut.
Fed Policy Implications
The Federal Reserve’s upcoming meeting on September 17-18 has markets on edge, with traders currently pricing in a 70% probability of a 25 basis point rate cut, according to the CME’s FedWatch Tool. However, the August CPI data could potentially shift these expectations.
Chris Diaz, portfolio manager at Brown Advisory, told Morningstar, “I don’t know why they wouldn’t go 50 [basis points],” highlighting the ongoing debate in the market regarding the size of the potential rate cut.
Market Reaction and Economic Indicators
While…
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