Fed Eyes Rate Hike as July CPI Report Looms with Modest Uptick Expected

The Federal Reserve might raise interest rates after the July Consumer Price Index (CPI) report, despite a sharp decline in energy and electricity prices in June. The CPI fell by 0.4%, marking the largest monthly drop since April 2020. However, the 12-month CPI still rose to 3.5% with core CPI at 2.6%. Food and shelter indices continued to increase.

The July CPI is expected to rise slightly due to higher oil prices following geopolitical tensions. The Cleveland Fed Nowcast forecasts a 0.09% headline increase. Markets are pricing in a modest July CPI uptick, watching Treasury yields, gold, and the dollar for signals on future Fed rate moves.