The Fed’s Next Moves After Mixed Data

Arunima Sinha, a Global Economist at Morgan Stanley, discusses the Federal Reserve's (Fed) likely policy path following the July CPI print. Sinha maintains her baseline prediction that the Fed will hold rates steady this year, despite the CPI data showing a reversal in services inflation. She analyzes the implications of the data, particularly regarding the impact of tariffs and the potential for further acceleration in goods inflation. The August jobs report is highlighted as a key factor influencing the Fed's decision, with potential scenarios ranging from maintaining the hold to initiating easing depending on employment figures. Finally, Sinha briefly touches upon the implications for other central banks, such as the European Central Bank (ECB) and the Bank of Japan (BoJ), emphasizing the interconnectedness of global economic conditions and central bank policies.