Fed Faces Crucial Decisions

The Week Ahead: Week of 24 July (GMT+3)

Tuesday, 25 July, 17:00

US CB Consumer Confidence (Jul)

Despite the Federal Reserve’s efforts to curb inflation through interest rate hikes, the U.S. economy maintains positive performance. Consumer confidence reached its highest level in June, rising from 102.5 to 109.7. However, Dana Peterson, Chief Economist at The Conference Board, highlighted that the expectations gauge indicates consumers’ anticipation of a recession in the next 6 to 12 months.

Wednesday, 26 July, 21:00

US Fed Interest Rate Decision

Traders are eagerly anticipating the Federal Reserve’s decision to raise its benchmark interest rate this month, expecting it to reach a range of 5.25% to 5.5%. This anticipation is fueled by positive economic data, including Consumer Price Index and Initial Jobless Claims. According to CME FedWatch GTool, there is a 14% probability of a rate hike in September and a 27% probability of one by November.

Thursday, 27 July, 15:15

EU ECB Interest Rate Decision (Jul)

In June, the European Central Bank (ECB) raised its interest rates to 4.00%, marking the highest level in 22 years. The ECB also indicated that inflation is expected to remain above the 2% target until the end of 2025. In their recent meeting, ECB policymakers discussed the possibility of further interest rate hikes in order to address the inflationary pressures and bring it back to the desired target level.

Thursday, 27 July, 15:15

US GDP (QoQ) (Q2)

The U.S. economy exceeded expectations in the first quarter, growing at an annualised pace of 2%, higher than the anticipated rate of 1.4%. The Bureau of Economic Analysis attributed this growth to stronger-than-expected consumer expenditures and exports, which has also had a positive impact on inflation.

Friday, 28 July, 15:30

US Core PCE Price Index (MoM) (Jun)

The inflation rate, measured by PCE, indicates a gradual decline, dropping only 0.1% in the latest record, compared to the 0.4% rate in the previous month. The released data has raised some doubt about the Federal Reserve’s approach in tackling inflation but the recent comments from Fed Chair Jerome Powell may suggest that the U.S. central bank will implement two more interest rate hikes this year.