The CPI will be announced tomorrow. Will the market still fluctuate due to CPI? What does the Federal Reserve cut interest rates mean? by: Langjian Trading Co., Ltd.

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On Thursday, investors will focus on the key data point that will influence the future interest rate policy of the Federal Reserve: the June Consumer Price Index (CPI). The inflation rate is expected to show an increase of 3.1%, down from 3.3% in May, the smallest increase since January. The core CPI (excluding food and energy) is expected to rise 3.4% year over year and 0.2% month over month.

Bank of America economists believe the June CPI report will boost market confidence. Federal Reserve Chairman Powell stressed during congressional hearings that more data is needed to confirm that inflation is moving towards the 2% target. Rent and landlord equivalent rent are expected to cool down, and service prices may fluctuate. Goldman Sachs predicts core CPI and core PCE inflation of 3.2% and 2.7% respectively in 2024.

The market expects the Federal Reserve to cut interest rates 1 to 2 times in 2024, and the probability of cutting interest rates in September is about 75%. If the CPI data is in line with expectations, the Federal Reserve may start a cycle of cutting interest rates in December.