How Will US Inflation Data Impact the September Fed Meeting?

• US inflation rates aren’t coming down as fast as anticipated.

• Markets are now fully pricing in a 75-bps rate hike at the September Federal Reserve meeting.

• US stocks have sank rapidly, while the US Dollar has clawed back nearly all of its recent losses.

The August US CPI report had a significant impact on financial markets on Tuesday – the US Dollar soared, gold prices slumped, and US stocks sank rapidly.

Headline US inflation increased +0.1% m/m and +8.3% y/y, topping forecasts of no gain m/m and an +8.1% y/y increase. The core reading was hotter than expected as well, coming in at +0.6% m/m versus a forecast of +0.3%, and the y/y was at +6.3% versus +6.1% expected.

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

What does the August US inflation report mean for the September Federal Reserve rate decision?

https://www.dailyfx.com/forex/fundamental/article/weekly_spotlight/2022/09/14/how-will-us-inflation-data-impact-the-september-fed-meeting.html