Investors are awaiting the consumer-price index data due Tuesday, one day before the Federal Open Market Committee concludes its meeting on Wednesday.
The consensus is that the Fed will keep its interest rate unchanged at the conclusion of this week’s meeting. Fed fund futures traders are pricing a 76.9% likelihood that the Federal Reserve will keep its interest rate stable this week, leaving the main policy rate target in the range of 5% to 5.25%, according to the CME FedWatch tool.The consensus is that the Fed will keep its interest rate unchanged at the conclusion of this week’s meeting. Fed fund futures traders are pricing a 76.
If the core inflation numbers arrive higher than anticipated, “I think we’ll see chances move much more closely to a coin toss for the Federal Reserve to hike on Wednesday, and then people who are expecting a kind of halt will dial back their expectations,” Giles Coghlan, chief market analyst at HYCM, said in a phone interview.
“The Fed wants to see 0.2% month-on-month or below CPI readings to be confident inflation will return to 2%,” Garvey wrote in a recent note. “We aren’t there yet so if they do hold rates steady [in June], as we predict, it is likely to be a hawkish hold with the door left open to further rate hikes if inflation doesn’t slow – July is clearly a risk.”
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