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Fed seen avoiding rate hikes this year as inflation data looms

A weak US jobs report lowered the odds of a September hike to about 50-50, from more than 70% at the end of July, while CPI and PPI are expected to drive Fed deliberations.

Reported · Written up by our desk · Central Banks

FXStreet, citing John Velis of BNY Markets, said expectations are shifting toward no Federal Reserve rate hikes this year, even as risks remain skewed to the upside.

The note pointed to a weak US jobs report that reduced the implied probability of a September hike and trimmed tightening already priced along the interest rate curve.

Velis also said that forthcoming CPI and PPI releases are likely to be central to the Fed’s decision-making, with the September-hike probability falling from more than 70% at the end of July to around 50-50 as of the article’s writing.

In the broader FX commentary included with the piece, focus is on Wednesday’s US CPI as key event risk, with traders watching for further developments amid inflation concerns and other market headlines.

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