Fed Keeps Rates Unchanged, Markets Price in September Hike

The Federal Reserve kept interest rates unchanged at its July meeting, as expected. Markets are now pricing in a two-thirds chance of a rate hike in September.

Chairman Warsh has emphasized that the Fed's decision will be data-driven, making upcoming US macro releases and inflation prints crucial for investors to watch. A cooling labor market and subdued core Consumer Price Index (CPI) could prompt investors to reassess the timing of any further rate increases.

A strong spring payroll growth has moderated, while household sentiment suggests a softer labor market than the 4.2% unemployment rate implies. If this trend continues, it may lead investors to reconsider whether a September hike should be delayed.