The Federal Open Market Committee (FOMC) meeting is this week, Tuesday and Wednesday the 14th and 15th of June.
Market consensus is for a 50bp interest rate hike. Confidence in +50 was shaken after the US CPI data was released on Friday:
US May CPI +8.6% y/y vs 8.3% expected
- m/m reading +1.0% vs +0.7% expected and 0.3% prior
Ugly stuff indeed. And 9% inflation may not be too far away:
- El-Erian on US CPI inflation says “we may well get to 9%”
Consumers are rattled:
US June prelim UMich consumer sentiment 50.2 vs 58.0 expected
- 6-point fall in consumer sentiment
- down to a record low in the survey’s history (back to the 1970s)
Remarks from FOMC members leading up to the FOMC (prior to the current blackout period) have indicated a 50 basis point hike is to be expected. But does Friday’s CPI blowout (remember, leading into the figures the complacent consensus was that inflation had peaked … ’cause a reading came in lower, sheesh) put a ‘surprise’ 75bp interest rate hike from FOMC back on the table?
The pot hinging on Wednesday’s reveal is large.