• The figures could alter the Federal Reserve’s calculations, as it is certain to increase interest rates again at its next policy meeting on September 21.
• The third consecutive rise of that size is still expected to be three-quarters of a percentage point, or 75 basis points, according to traders.
• However, traders are anticipating that the rate increase in September will be the only one on this scale.

Is inflation actually at its peak? Are customers becoming more self-assured? When the most recent consumer and producer pricing indices, as well as retail sales data for August, are all released this week, we’ll have those answers.

The figures could alter the Federal Reserve’s calculations, as it is certain to increase interest rates again at its next policy meeting on September 21. How much more or less is the query?

The third consecutive rise of that size is still expected to be three-quarters of a percentage point, or 75 basis points, according to traders. Jerome Powell, the Fed’s head, also stated last week that “Price stability is a responsibility that the Fed recognizes. We must take immediate action.”

However, if inflation readings continue to indicate that “price stability” may finally be closer to reality, may the likelihood of another significant rate hike decline? Tuesday morning sees the release of the consumer price index (CPI) data, while Wednesday sees the release of the producer pricing index (PPI) data.

Remember that the market was only predicting a 28% chance of a 75 basis point increase in September at the end of July. According to fed funds futures trading on the CME, investors currently believe that there is an 88% chance of another significant raise.

According to current predictions by economists, consumer prices will marginally decrease from July to August even if they increased by 8.1% over the previous 12 months. It goes without saying that 8.1% is still quite high by historical standards, but it would be a noticeable decrease from the June price increase of 9.1% on an annualized basis.

“We most likely already passed the inflation high. Prices for food and energy are decreasing. More room exists for the negative, “Joe Kalish, the company’s chief global macro strategist, said.

However, traders are anticipating that the rate increase in September will be the only one of this scale. Interest rates would reach their target range of 3% to 3.25% if the Fed raises rates by three-quarters of a point on September 21.

Take a look at the November fed funds futures on the CME. Investors were pricing in a 70% chance of a half-point increase at the Fed’s November 2 meeting, to a range of 3.5% to 3.75%, as of lunchtime on Friday.

However, there was only a 10% chance of a fourth consecutive 75 basis point hike, which may be part of the reason why stocks have recovered so far in September after their decline in August.

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