Before the Fed's interest rate decision tomorrow, the eyes of the markets will be on the US inflation data, which will be announced shortly.
US May inflation data will be announced at 15.30 CEST today. Inflation expectations are as follows:
Consumer price index Monthly expectation: 0.2%
Consumer price index Annual expectation: 4.1%
Core consumer price index Monthly expectation: 0.4%
Core consumer price index Annual expectation: 5.3%
Will the Fed Rate Pass?
If there is no surprise in the inflation data to be announced today, it is expected that the FED will not increase the interest rate tomorrow and will skip it. The expectation that the interest rate will be kept constant is currently around 75%.
Here, there will be a difference between the FED's stopping the interest rate hikes and the passing of the rate hike specifically for this meeting, and the explanations regarding this in the interest rate decision text will be determinative in the direction of the markets.
Although economists say that the probability of the Fed not increasing interest rates at tomorrow's meeting is strong, they do not expect a message that interest rate hikes have stopped. The Fed is expected to reiterate its message that it will continue to make monetary policy decisions based on data.
Before tomorrow's Fed rate decision, today's inflation data will be followed closely. The fact that the inflation is parallel to or below the expectation will strengthen the possibility that there will not be an interest rate increase tomorrow, and this will reflect positively on risky assets such as Bitcoin. Investors may switch to a wait-and-see position and exit risky assets, as the inflation rate above expectations will obscure the outcome of the FED's interest rate decision tomorrow.
Leading inflation indicators for April came above expectations.
Don't forget to follow us on Twitter and Telegram for quick access to inflation data.