While the effects of the banking crisis that broke out in the USA continue, the Fed’s interest rate decision on March 22 is the number one agenda item in the markets.
Evaluating that the bank crisis is the result of the FED’s rapid monetary tightening, economists think that interest rate increases will slow down from now on, while FED swaps are pricing a 25 basis point increase in interest rates on March 22 with a 73% probability.
While Goldman Sachs and some economists think that there will be no interest rate hike decision on March 22, many economists say that the future inflation data will directly affect the decision on March 22.
If an inflation data that is in line with or below expectations is announced, it seems likely that the markets will pass from the 25% rate hike pricing to the non-interest rate hike pricing. This is interpreted as the rise in assets such as gold and Bitcoin will continue.
Although an inflation data that will be announced above expectations will cause a short-term dump in the market, experts who think that the FED is stuck, evaluate that the next decreases are an opportunity for investors.
In both cases, volatility will be quite high shortly before and after the data is released.
US inflation data will be released today at 15.30 CEST. The expectations are as follows:
Consumer price index Monthly expectation: 0.4%
Consumer price index Annual expectation: 6%
Core consumer price index Monthly expectation: 0.4%
Core consumer price index Annual expectation: 5.5%
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