Moderate inflation data, rising jobless claims, and weakening consumer confidence have heightened expectations of a September Fed rate cut, with markets focusing on Powell’s press conference and updated projections.
Recent CPI and PPI reports showing moderate inflation, alongside a spike in initial jobless claims, have increased expectations that the Federal Reserve will cut interest rates by 25 basis points at its September meeting. U.S. consumer confidence has dropped to its lowest level since May, while long-term inflation expectations have risen for two consecutive months. Markets are not expected to respond strongly to the rate cut itself, with attention shifting to Chair Jerome Powell’s press conference and the release of updated economic projections, including the dot plot. Other key events this week include interest rate decisions from the Bank of Canada, Bank of England, and Bank of Japan.