What important data will be announced today before the FED's interest rate decision to be announced on July 26.
At 15.30 CEST (12:30 UTC), US June inflation data will be released. Expectations regarding critical data are as follows:
Consumer price index Monthly expectation: 0.3%
Consumer price index Annual expectation: 3.1%
Core consumer price index Monthly expectation: 0.3%
Core consumer price index Annual expectation: 5%
Today's Data Will Clarify Interest Rate Decision
After the FED announced its previous interest rate decision, it pointed out that two more rate hikes could be made during the year. For now, the markets expect a 25 basis point rate hike at the July meeting. If the inflation data that will be announced soon come above the expectations, the expectation of a 25 basis point interest rate increase will be almost certain.
If the inflation data remain below expectations, FED's keeping the interest rate fixed in July will come to the agenda again.
According to CME FED Watch data, the probability of a 25 basis point rate hike on July 26 is 92.4%. This shows that a 25 basis point rate hike is priced in by the markets.
If the inflation data comes below expectations, we may see a new rally in the markets with the positive expectations regarding the FED.