The probability of a 50 basis point (bps) interest rate cut from the Federal Reserve in September has significantly decreased after the core CPI came in higher than expected on Wednesday
However, traders are still pricing in a 100% probability of a rate cut, but they are now looking more toward a smaller 25 bps cut
Consumer prices rose by 2,5% over the 12 months leading up to August, the slowest rise since February 2021. This was lower than the 2,9% increase seen in July
Any sign of ongoing inflation pressure could make the central bank more cautious about cutting rates
Overall, even though inflation was a bit higher than expected, most companies predict the Fed will go for a smaller 25 bps cut next week, staying cautious but optimistic that inflation will gradually ease
A crucial nonfarm payrolls report last week showed that the US economy added fewer jobs than anticipated in August, but rose from a sharply revised July reading
Concerns about a weakening U.S. labor market have been somewhat calmed by other data showing fewer unemployment claims and growth in the service sector
Activity data and the labor market will be just as important as inflation in determining the pace and depth of the upcoming interest rate cuts
 interest rate cut from the Federal Reserve in September has significantly decreased after the core CPI came in higher than expected on Wednesday){kind=link}