Last Wednesday, August inflation from the world’s largest economy, the United States, was released and the indicator showed monthly growth of 0.6 percent, which in the annual calculation put this year’s nominal inflation at 3.7 percent.
To put the reader in context, I mention that inflation was at 3 percent in June and rose again to 3.2 percent in July; The increase from July to August was already planned, but not that high; The reason for this is that the increase in oil prices was too strong in the reporting month. Let’s remember that West Texas Intermediate (WTI) was trading at $70 a barrel a little over a month ago, and at the end of August it had already reached $90, so this has not had any impact on the price of gasoline made. wait.
I also remind the reader that nominal inflation includes the price of all goods in the economy, but for the purposes of monetary policy, the Federal Reserve likes to consider not nominal inflation, but underlying inflation, since the latter is structural and eliminated from the Index the prices of goods that are very volatile are derived, such as: B. Oil and its derivatives, as well as other agricultural products, whose prices fluctuate greatly in a very short period of time.
The data released in August ended up not being so bad, as although nominal inflation growth was above estimates, the underlying index continued to show a downward trend as it was generally at 4.7 percent in July. percent, and for the eighth month of the year it was reduced to 4.3 percent.
The markets correctly received what was said and that is why the stock markets in the United States showed a positive signal from Wednesday after showing a downward trend the previous week. The big question on everyone’s mind today is what the Federal Reserve will do with interest rates at the next meeting, which will be held on September 20th.
According to the probabilities used on Wall Street, more than 80 percent of market participants believe that the Federal Reserve will not raise interest rates above current levels; However, the likelihood that the rate will rise in November grows to 44 percent, increasing uncertainty about what might happen. We can say that the currency is in limbo and whether it rises or not in November will depend on the inflations we see in September and October.
A certain degree of caution can now be seen in the daily speeches of Federal Reserve officials, even if some are still calling for an additional increase in the key interest rate. At this point in the year it is very difficult to say whether this will happen or not, but we can be sure that the interest rate, currently at 5.5 percent, will not go down in the near future and surveys suggest so The first downward reaction will not occur until June 2024.
Inflation remains a problem and the fight against it must be constant; You can never feel like you have mastered it. That’s the story!
