August 5 International Forex News

Fed's Schmid: Inflation Excluding Energy Remains Too High, and Supply-Demand Imbalance Is the Root Cause of Inflation

August 5: Fed's Schmid said: "Our inflation problem is not only about energy. Inflation measures excluding energy remain well above 2%, revealing an underlying trend in the data. This trend is not favorable to us. In the six months before June, the monthly pace of inflation excluding energy remained above the level needed to achieve our inflation target. Over the past 12 months, inflation excluding energy was 3.2%, about 0.5 percentage points higher than the level in June last year. Inflation has remained too high across a broad and expanding range of goods and services. Many factors are pushing inflation higher. Reading economic commentary, one can see that recent attention has focused on supply shocks. These shocks include negative supply factors related to shipping disruptions, oil, and tariffs, all of which have pushed up prices. I am quite cautious about this commentary and oppose the tendency to attribute our inflation problem solely to supply shocks. While supply is indeed an issue for some commodities, inflation is always the result of supply, demand, and the balance between the two."

Probability of a 25-Basis-Point Fed Rate Hike in September Stands at 58.4%

August 5: According to CME FedWatch, the probability that the Federal Reserve will keep interest rates unchanged by September is 41.6%, while the probability of a cumulative 25-basis-point rate hike is 58.4%. By October, the probability of rates remaining unchanged is 30.5%, the probability of a cumulative 25-basis-point rate hike is 53.9%, and the probability of a cumulative 50-basis-point rate hike is 15.5%.