Welcome to Extreme Investor Network, where we provide you with unique and valuable insights into the stock market, trading, and all things Wall Street. Today, we will be diving into some key information about inflation rates, central bank decisions, and the latest updates in the FX market.
In a recent Reuters poll, economists projected that headline year-over-year (YoY) inflation is expected to ease to +2.6%, down from +2.9% in July. Core inflation, excluding energy and food components, is anticipated to remain steady at +3.2%. Despite four consecutive months of softening data, MoM inflation is expected to increase by +0.2%.
The ongoing debate surrounds the Federal Reserve’s potential rate cut of either 25 or 50 basis points. With recent softer inflation numbers and a slowdown in job growth, the likelihood of a 50 basis point reduction is slim. Unemployment at 4.2% and a real GDP growth rate of +3.0% in Q2 24 do not signal a recession, further supporting a more conservative rate cut decision.
Shifting focus to the European Central Bank (ECB), a cautious rate cut is anticipated at Thursday’s meeting following a 25 basis point reduction in June. With headline inflation nearing the 2.0% target, markets expect a 25 basis point cut this week, possibly followed by another cut in December. Euro area CPI inflation cooled to +2.2% in August, while core inflation remains elevated at +2.8%.
As the ECB releases its economic forecasts, downward revisions in headline inflation and growth are expected. However, the central bank’s stance on future rate reductions will be closely monitored, with analysts not expecting substantial commentary in the statement.
In the FX market, G10 currencies have experienced fluctuations in the past five days. Stay tuned to Extreme Investor Network for more exclusive insights and analysis on the latest developments impacting the stock market and global economies.