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What will the Fed do after the inflation data: It has fallen to an unprecedented level

The fact that the inflation figures announced in the US have come in at the expected level has also seriously increased the expectation of a 25 basis point cut in the markets. The expectation rate of a 50 basis point cut has fallen to an unprecedented level in the recent period and has dropped to 17% in the CME.

The inflation data for August in the US came in line with expectations. This situation has ensured that the economy has cooled sufficiently and the possibility of a recession is distant. In addition, inflation in the US has fallen for the last 5 months in a row.

The 25 basis point rate has increased to 83%

In the CME Fed Watch Tool, where the Fed's interest rate decision expectation is priced in the futures markets, the expectation of a 25 basis point cut from the interest rate meeting on September 18 has increased to 83%. The expectation of a 50 basis point reduction has fallen to an unprecedented level and has dropped to 17%.

Bitcoin price did not move

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

Paul Ashworth, an analyst at Capital Economics, said in a client note he shared while he was hot, “We think the Fed will start its interest rate reduction policy with a 25 basis point reduction. Core inflation coming in at 3.2 percent is a high level… This was due to the 5.2% increase in housing costs.”

Citi says, “First 25, then 2 50”