Fed Rate Expectations Rise After US Consumer Prices Increase
Following a 0.4 percent monthly and 3.4 percent annual increase in consumer prices in August, market expectations for a Fed rate hike have strengthened.
Following the consumer prices in the US recording an increase of 0.4 percent on a monthly basis and 3.4 percent on an annual basis in August in line with expectations, markets revised their expectations regarding the US central bank's interest rate moves upward.
August Inflation Figures Announced
In the US, the consumer price index recorded an increase of 0.4 percent on a monthly basis and 3.4 percent on an annual basis in August. This data was recorded as the last major inflation indicator before the critical meeting to be held in September.
Probability of Rate Hike Reaches 90 Percent Level
According to WIRP data, the probability of a 25 basis point rate hike expected to take place next week rose to 90 percent following the inflation data. Before the consumer price index was announced, this rate was known to hover around 70 percent.
Year-End Expectations and Core Inflation
Markets have fully priced in a total of two rate hikes by the end of this year in the US. On the other hand, while core inflation fell from 2.5 percent to 2.4 percent on an annual basis, it rose from 0.2 percent to 0.3 percent on a monthly basis.
According to a separate report published on Thursday, producer prices recorded their highest increase since May last month due to the impact of rising energy prices.