Probability of interest rate hike
A Inflation data lower than expected Investors and Wall Street economists are confident the Fed will finish raising interest rates — at least until the end of the year.
According to CME Group, after the data was released, the market immediately priced in a near 100% probability that the Federal Reserve would keep interest rates unchanged in December.
Ellen Zentner, chief economist at Morgan Stanley, wrote: “Service sector CPI was weak in October, and November’s CPI data did not meet our previously set standards for further interest rate hikes in December.” “We believe that inflation is weak, And it’s still tight.” Financial conditions will keep the Fed on hold. “
However, this does not mean that the central bank can declare victory over inflation.
Michael Pearce, chief U.S. economist at Oxford Economics, warned that in addition to home prices rising just 0.3% month-on-month in October, there are signs that service sector inflation will be sticky, reflecting tight labor market conditions and the potential for There may still be some way to go before returning to the 2% target. “
“Overall, October’s CPI report gave Fed officials more confidence that inflation is on a firmly downward trajectory, which should prevent them from raising rates further,” Pierce continued.
“However, the deflation process still has some way to go, and the path of weakening service sector inflation depends on the continued cooling of labor market conditions, so it will take a long time for the Fed to consider cutting interest rates. “