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Mixed Inflation Report Alters Fed Rate Cut Expectations

Investors now anticipate a smaller rate cut from the Federal Reserve following higher-than-expected core inflation data.

  • Core consumer prices rose 0.3% in August, exceeding Wall Street's 0.2% estimate.
  • Markets now predict an 85% chance of a 25 basis-point rate cut at the Fed's next meeting.
  • The probability of a 50 basis-point cut has dropped significantly, with only a 15% chance.
  • The latest CPI report showed annual headline inflation at 2.5%, the lowest since early 2021.
  • Investors are closely watching upcoming jobless claims and retail sales data for further economic indicators.
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