The CME FedWatch tool indicates a 99.8% probability that on July 26, after the FOMC meeting, the Federal Reserve will raise the interest rate by a%. Additionally, there is a possibility that the series of interest rate hikes by the Federal Reserve, which began in March 2022, will come to an end this month. The basis for this is the recently released inflation data: the CPI (Consumer Price Index) and the PPI (Producer Price Index) reports, which show a decrease in inflationary pressure and its approaching the target level of 2%.
The highest level of the Consumer Price Index was 9.1%, but in June it decreased to 3%. This figure coincides with the Producer Price Index, excluding food and energy, which decreased by 0.2% in June.
A survey conducted by the University of Michigan showed that consumer sentiment soared to 72.6% in July, which is 13% higher than in June.
The Federal Reserve has stated that its decisions on interest rates depend on data. According to the data, the US economy has contracted, significantly reducing the level of inflation.
Based on the CME probability indicator, it is clear that the rates will remain unchanged at the September FOMC meeting, with a probability of 87.9%. In November, they are expected to remain the same with a probability of 87.9%, and in December with a probability of 64%.
