Thursday: Fed holds rates, but with a split vote

The Fed holds rates, but three dissenters still wanted a hike. Markets now look to key US inflation data tonight. And Australia’s core inflation is lower than expected, taking an RBA rate hike off the table for its August decision.

In our deep-dive interview, ANZ Head of Australian Economics Adam Boyton reminds us that core inflation is still well above the RBA’s target.

5 things to know in 5 minutes:

1. The Federal Open Markets Committee has just announced the Fed Funds Rate is on hold at 3.5%-3.75%. It was 9-3 vote, with the three dissenters wanting a rate hike, says ANZ Head of G3 Economics Brian Martin.

2. Brian says market pricing for a possible next Fed rate hike was pushed out following the decision.

3. Australian second quarter trimmed mean inflation was slightly lower than expected at 0.8% in the quarter and 3.6% in the year to June. ANZ Head of Australian Economics Adam Boyton says weaker demand has made it tough for businesses to pass on cost increases.

4. Global markets now turn their attention to US June Personal Consumption Expenditure (PCE) inflation data tonight. ANZ Economist Bansi Madhavani says price pressures are set to be mild, with the headline PCE expected to fall 0.1% in the month, and core PCE expected to rise 0.2%.

5. Also on the radar is a rate decision from the Bank of England (BoE). It’s the first since the appointment of a new Prime Minister and the renewal of conflict in the Middle East. Bansi expects the BoE to hold.

Cheers,

Bernard.

PS: Catch you tomorrow with the detail from US PCE inflation data tonight.

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