CPI, PPI Fuel Fed Confusion
Last week’s CPI and PPI reports delivered a mixed message, reinforcing the market’s growing unease with the Fed’s next move. Consumer prices pointed to some cooling, but Thursday’s hotter-than-expected jump in producer prices briefly reignited fears of sticky inflation. Still, the dollar gave back its Thursday gains on Friday, finishing the week down 0.5% against a basket of currencies.
The pullback didn’t shift rate expectations much. According to CME’s FedWatch Tool, money markets still reflect a 93% probability of a 25-basis-point rate cut in September — and many economists expect another cut before year-end. A slowing economy and lingering tariff-related inflation pressures are keeping the door wide open.
Chicago Fed President Austan Goolsbee flagged services inflation as a concern, particularly with tariffs creating what he described…
