What will the Fed do after the inflation data: It fell more than ever seen recently

The fact that the inflation figures announced in the USA came at the expected level also significantly increased the expectation of a 25 basis point discount in the markets. The 50 basis point discount expectation rate fell more than ever seen in the recent period and fell to 17% in the CME.

The inflation data for August in the USA came within expectations. This situation has enabled the view that the economy has cooled down sufficiently and the possibility of recession is far from taking place in the markets. In addition, inflation in the USA has decreased in the last 5 consecutive months.

25 basis points increased to 83%

In the CME Fed Watch Tool, where the Fed's interest rate decision expectation in the futures markets is priced, the expectation of a 25 basis point discount from the interest rate meeting on September 18 increased to 83%. The expectation of a discount of 50 basis points decreased to more than the recent period and decreased to 17%.

Bitcoin price did not play

After the announcement of the inflation data, it was also noteworthy that there was almost no change in the price of Bitcoin. The largest cryptocurrency is trading at $56,600 in the minutes when the news was written.

Paul Ashworth, an analyst at Capital Economics, said in a customer note he shared, “We think the Fed will start its interest rate-cut policy with a 25 basis point discount. It is a high level that core inflation is 3.2 percent... This is due to a 5.2% increase in housing costs," he said.

Citi says "First 25, then 2 50"

On the other hand, Citibank shared an analysis stating that it expects discounts of 50 basis points in September 25 and in November and December.