CPI Data for July Released in the U.S., September Rate Cut Decision is Urgent!
On August 13, the highly anticipated Consumer Price Index (CPI) data for July was officially released last night, and the results were largely in line with market expectations.
According to the latest data from Investing.com, the year-on-year forecast for July CPI was 2.8%, while the actual published value was 2.7%, meeting and even falling below market expectations. This result indicates that the July CPI data has paved the way for the Federal Reserve's rate cut in September.
However, the year-on-year forecast for core CPI in July was 3.0%, but the actual published value was 3.1%, marking the first time in nearly six months that the actual published value exceeded the forecast. This outcome breaks the market's 'comfort zone' and reminds the public that the battle against inflation is far from over.
Additionally, the CME “FedWatch” tool shows that the market currently expects a 94.3% probability that the Federal Reserve will cut rates by 25 basis points in September, while the probability of maintaining the current rate is only 5.7%. Furthermore, the probability of a cumulative rate cut of 50 basis points in October is 63.5%, with the probability of maintaining the current rate at just 3.0%; and the probability of a cumulative rate cut of 75 basis points in December is 50.8%. These figures further solidify market expectations and confidence in 'at least two rate cuts by the end of the year.'
Meanwhile, U.S. macroeconomic data also shows some pressure. According to real-time data from us-debt-clock, the total U.S. national debt has surpassed $37 trillion for the first time, currently exceeding $37,004,817,627,586. This figure highlights a serious imbalance in the U.S. fiscal situation, with a continuously expanding fiscal deficit and rising debt levels, which increases the fiscal burden and poses potential threats to economic growth.
Against this backdrop, U.S. Treasury Secretary Yellen urged the Federal Reserve to make a substantial rate cut of 50 basis points in September. Yellen believes that with the labor market conditions weakening and the national debt continuing to grow, more robust economic stimulus is needed. This call reflects the government's concerns about the current economic situation and the urgent need for adjustments in monetary policy.
In summary, the release of the July CPI data provides more basis for the Federal Reserve's rate cut in September, but the unexpected rise in core CPI also reminds the market that inflation pressures still exist. Under the dual pressure of macroeconomic data and the U.S. fiscal situation, the Federal Reserve's decision-making will become increasingly complex. Investors should closely monitor these two 'signal sources' to grasp the direction of the rate cut path in real time.