US Fed unlikely to cut interest rates significantly... Core CPI index rises more than expected

The U.S. Department of Labor announced on the 11th that the August Consumer Price Index (CPI) rose 2.5% year-on-year, the smallest increase since February 2021.
The market forecast had been for a 2.5% increase, but there was also a forecast for a 2.6% increase, so the market forecast for August was
Many people believe that the increase was lower than the previous year. The same figure for July was 2.9%, so this also shows that the increase is slowing down. On the other hand, what drew attention in this latest CPI was the large fluctuations in food and energy prices.
The core index, excluding the yen, rose 0.3% from the previous month, beating the market forecast of 0.2%. This is in line with the prediction that the Federal Reserve will make a large interest rate cut of 0.5 percentage points this month.
The market is already including the possibility that the Federal Reserve will decide to lower interest rates at the Federal Open Market Committee (FOMC) meeting to be held next week on September 17-18.
Currently, attention is focused on the extent of the interest rate cut, with the latest CPI reading increasing expectations that the cut will be limited to 0.25 percentage points.
According to CME (Chicago Mercantile Exchange) FedWatch, there is an 85% chance of a 0.25 percentage point rate cut by the FOMC.
The possibility of a 0.5 percentage point interest rate cut is 15%. (As of September 2nd) Interest rate cuts are generally thought to be a tailwind for risk assets such as cryptocurrencies and stocks.
Therefore, theoretically, the simple idea is that the greater the interest rate cut, the stronger the upward pressure on the market.
As proof of this, the Dow Jones Industrial Average and the Nasdaq Composite Index fell on the 11th in the U.S. stock market.
Both indexes then started to rise, but some have suggested that one of the factors behind the decline was the core CPI index.
However, the current market is no longer experiencing such simple price fluctuations. This is because investors are now more interested in the economy and employment than inflation.
This is because investors are shifting their focus to the use of the U.S. economy. Global financial markets fell sharply on August 5th following the release of the U.S. employment statistics. An economic downturn is a headwind for risk assets.
That means a 0.5 percentage point interest rate cut could raise speculation that the economy is worsening.
As a result, the current cryptocurrency market is directionless, making it difficult to make investment decisions based solely on the outlook for interest rate cuts.
David Solomon, CEO of the Fed, said in an interview with CNBC on the 11th that there is still a chance that the Fed will cut interest rates by 0.5 percentage points.
One of the reasons for this is the state of the labor market, and the possibility of a 0.5 percentage point interest rate cut is said to be in the low 30% range. As such, it is difficult to predict the future of the macro economy at present.
If the Fed were to start cutting interest rates without any further ado, it would be a boon for cryptocurrency prices, but investor concerns about the economy need to be allayed.
Therefore, the FOMC meeting and the press conference of Fed Chairman Powell next week will be closely watched.
The latest version of the "Policy Interest Rate Distribution Map (Dot Chart)" that the Bank of Japan considers appropriate will also be announced. The current cryptocurrency market is being affected by the US presidential election, the Bank of Japan's monetary policy, the Middle East situation, etc.
There are many factors to watch, but we still need to be vigilant about U.S. inflation and the economy.