US CPI Report Hangs in Balance as Rate Hike Odds Even Out

Market expectations for a US Federal Reserve rate hike next month are hanging in the balance. CME FedWatch, a forecasting tool, puts the odds of a rate increase at near 50%, while keeping rates steady is also seen as an option.

The upcoming US Consumer Price Index (CPI) report may hold the key to deciding which path the Fed will take. The report's release comes as investors still expect the US to raise interest rates later this year, with a probability of at least one 25 bp hike priced-in at approximately 80%.

Boston Fed President Susan Collins has stated her support for a rate increase if inflation remains high. Collins emphasized that inflation is 'too high' and expressed her willingness to back a September rate hike under these conditions.