9 hours ago
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The Consumer Price Index (CPI) preview suggests that upcoming data will align with market expectations, implying that the Federal Reserve may not increase interest rates. This assessment comes amid a backdrop of declining inflation, with the CPI having decreased from 4.2% in May to 3.5% in June 2026. The Federal Reserve has maintained its federal funds target range at 3.50%–3.75%, with recent projections indicating a divided stance among policymakers regarding future rate hikes. The current market pricing appears consistent with expectations that the Fed may hold rates steady, as indicated by a significant reduction in the likelihood of a rate hike by September 2026.
Key Takeaways
- The CPI preview suggests data will be in line, which may indicate a decreased likelihood of a rate hike.
- Market pricing for a September rate hike has dropped to 32% YES, down from 42% just 24 hours ago.
- The October meeting’s rate hike probability also declined, now at 48.5% YES, reflecting adjusted expectations.
What to Watch
Key indicators to monitor include the official CPI release and any statements from Federal Reserve officials, particularly Chair Jerome Powell. A CPI figure that matches or is below expectations could further support the scenario where rates remain unchanged. Conversely, any unexpected rise in inflation or hawkish commentary from Fed officials could shift market expectations toward a rate hike. The upcoming Federal Open Market Committee (FOMC) meetings on September 15-16 and October 27-28 will be critical in determining the Fed’s policy direction.
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Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.
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