The latest data on core inflation is indicating a softer trend, with a three-month annualized rate of 1.6%. This could lead to an on-target 0.2% month-on-month release of the July core PCE inflation data on August 30th. ING’s FX strategist Chris Turner suggests that markets should brace for dovish commentary from the Federal Reserve in response to these numbers.
With the Reserve Bank of New Zealand already cutting rates and signaling a quick move to neutral levels, the focus now shifts to the speed of Fed rate cuts. The upcoming Fed’s Jackson Hole Economic Symposium will provide further insight into the central bank’s intentions.
Looking ahead, the Fed’s decision on rate cuts in September will likely be influenced by upcoming activity data, particularly the August jobs report on September 6th. Additionally, retail sales data for July will be released today, with a focus on the retail sales control group and weekly initial claims.
Overall, the softer inflation trend and potential dovish commentary from the Federal Reserve could impact market expectations for future rate cuts and economic stability. Investors should monitor these developments closely to make informed decisions about their finances.