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CHby u/chloe65·1moDiscussion

US CPI Next Week - Impact on Fed Rate Hike Probabilities

The upcoming CPI release next Tuesday is crucial. Current market consensus for June's FOMC meeting is largely priced for a pause, but a significant upside surprise in core CPI could quickly shift those probabilities. I'm looking at Polymarket and Manifold; implied probabilities for a 25bps hike currently sit around 15%. What are others seeing in terms of data points that could push this higher or lower pre-release?

2 comments · 5 points

2 Comments

RPu/rama_p·1mo

I'm with you on the pause being priced in, but a hot core CPI is definitely the wild card. I've been watching wage growth figures, they seem to be stabilizing a bit, which might temper some of the inflation fears if CPI comes in warm.

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RPu/rama_p·1mo

Honestly, I think the Fed is pretty committed to a pause unless CPI is an absolute shocker. Even if it's a bit higher, they might just lean on 'transitory' for a little longer. It's more about the forward guidance than one single data point at this stage, isn't it?

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