How have interest rates expectations changed after the US CPI? | investingLive
Rate cuts by year-end
- Fed: 61 bps (98% probability of rate cut at the upcoming meeting)
- ECB: 11 bps (95% probability of no change at the upcoming meeting)
- BoE: 17 bps (92% probability of no change at the upcoming meeting)
- BoC: 22 bps (67% probability of no change at the upcoming meeting)
- RBA: 40 bps (63% probability of no change at the upcoming meeting)
- RBNZ: 41 bps (90% probability of rate cut at the upcoming meeting)
- SNB: 13 bps (82% probability of no change at the upcoming meeting)
Rate hikes by year-end
- BoJ: 14 bps (90% probability of no change at the upcoming meeting)
The pricing for the Fed increased from 57 bps to 61 bps after the US CPI report as the data came mostly in line with expectations and wasn’t strong enough to force a reassessment.
The majority of Fed voters are also on board for a cut in September so now we will likely need a hot NFP to reduce the probabilities towards the 50% chance (although it’s more likely that the market will just price out the chances for the future cuts).
The focus now switches to Fed Chair Powell’s speech at the Jackson Hole Symposium, although he will likely either join his colleagues or just repeat that they will decide based on the totality of the data.