Critical Inflation Data Will Be Announced in the USA: Fed's Decisions Are Awaited

While the interest rate hike voices within the US Federal Reserve (Fed) are increasing day by day, important inflation data that will affect these decisions will be announced today. It is eagerly awaited whether the decline in headline inflation, which has recently fallen below 4% again, and core inflation, which has fallen below 3%, will continue.

In the data to be announced at 15.30 TSI; Headline inflation is expected to be 3.4% and core inflation is expected to be 2.5%.

Still above 2%…

It is known that the Fed has been targeting a 2% inflation rate for a long time. Both the former chairman of the institution, Powell, and the new chairman, Warsh, stated that they had no intention of changing this goal. In fact, Warsh said at the last Fed meeting that they were paying more attention to PCE, that is, personal consumption expenditures, rather than CPI, and that they were targeting a 2% rate here. Core personal consumption expenditures data for July will be announced on August 26.

Before the Fed's September meeting, inflation figures for August will also be announced. Therefore, Fed members will have both inflation and 2 non-farm employment data at that meeting.

Employment and bonds also raise alarm

The Fed also needs to pay attention to interest rates in order to ensure maximum employment, which is another of its duties other than inflation. Finally, the expected increase of 57 thousand in non-agricultural employment did not occur at all, and on the contrary, it was observed that there was a 23 thousand outflow from employment in July.

This situation may cause the Fed to put the brakes on interest rate increases.

The fact that bond interest rates are significantly higher and the cost of borrowing is increasing is another factor that prevents the Fed from increasing interest rates. 30-year bond interest rates broke the 19-year record last week.