Yesterday’s events left the markets with a lot to process. The announcement of the US CPI inflation figures for May caused a notable market reaction ahead of the Fed’s policy decision. In comparison to the 3.4% and 3.5% forecast, the headline and core rates dropped to 3.3% and 3.4%, respectively.
The Federal Reserve kept interest rates at a 23-year high on Wednesday, as anticipated, as its fight to reduce inflation continues well into 2024.
The news comes after the central bank’s monetary policy committee met for two days and increased borrowing rates from almost zero percent in March 2022 to a range of 5.25 percent to 5.5 percent due to the rapid rise in pandemic-induced inflation.
The Fed has voiced concern that the economy is still too hot, the labour market is still too robust, and prices are rising too quickly to begin reducing rates, even though inflation has significantly decreased from its 9 percent peak two years ago.
The central bank noted that it will need to see more progress on inflation before it will drop rates, The meeting’s overall tone was a little bit hawkish.
Looking ahead to today, the primary release of interest will be the April industrial production data for the Eurozone. For the month, a slight 0.2% increase in output is anticipated. The most recent weekly initial unemployment claims data from the US will be displayed.