JP Morgan Asset Management said on Wednesday that it does not expect the Federal Reserve to raise interest rates further this cycle after headline inflation data showed a downward trend.
Fed interest rate futures reflect growing confidence that the Fed is unlikely to raise interest rates further after U.S. consumer prices rose by the most in 14 months in August, while annual growth in headline inflation was at its lowest in nearly two years.
“Although oil prices are still rising in early September, we expect the impact of oil price increases on the CPI to be limited,” David Kelly, chief global strategist at JP Morgan, said in a note.
“We think that, barring a new shock, annual headline consumption deflator inflation will remain below the FED’s 2% target in the fourth quarter of 2024.”
On September 20, FED policymakers will announce their short-term interest rate forecasts for the end of 2023. Considering that there are only two meetings left after September, these meetings will give strong clues about the interest rate move in November.
In the Fed’s most recent release of its projections in June, many thought interest rates would rise one notch above their current level in 2023. FED’s July meeting minutes also largely supported this view. But economic data since then have shown some signs that inflation is moderating and employment growth is slowing.
Bitcoin and cryptocurrency investors also focused on September 20, as it is expected to deeply affect the industry.
*This is not investment advice.