Although inflation slightly declined from the 40-year high level in July, the 8.5% CPI level is still ‘uncomfortably high’ for policymakers. Moreover, the U.S. economy witnessed two consecutive quarters of economic contraction.
To achieve its long-term target of 2% inflation, the Federal Reserve Chairman has indicated that the central bank will use the monetary policy measures at its disposal, including aggressive interest rate hikes. The Fed’s hawkish stance is expected to keep the market under pressure in the upcoming months.
