The unexpected rise in August U.S. inflation has become a focal point for discussions among economists and investors, despite forecasts for interest rate cuts.
What Did the Latest Figures Reveal?
In August, the Consumer Price Index (CPI) increased by 0.4%, surpassing the expected 0.3% rise. This comes after a 0.2% increase in the previous month. Annually, the inflation rate rose to 2.9%, aligning with forecasts and marking an increase from 2.7% in July. Excluding food and energy, the core CPI rose by 0.3%.
How Did Market Players Respond?
The market reacted swiftly. Bitcoin experienced a minor drop of 0.5%, settling at $113,700 from $114,300. U.S. stock index futures, after an initial dip, closed with a slight 0.1% gain. Additionally, the 10-year Treasury yield decreased, falling around five basis points to 4.00%.
Will This Divert the Federal Reserve’s Path?
The possibility of an interest rate cut by the Federal Reserve remains a hot topic. Projections suggest a 92% chance of a 25 basis point reduction. However, the prospect of a 50 basis point cut has diminished due to recent economic signals. "We are closely examining the data, but don’t foresee it drastically altering our next move," stated a Federal Reserve spokesperson.
As the next Federal Reserve meeting approaches, traders are aligning their focus on both immediate and strategic long-term macroeconomic policies.
