Analyst says the Federal Reserve's stance depends on the decimal digits of core CPI

Analyst Brian Bingham stated that the Federal Reserve is currently in its most contradictory position: its policy stance depends almost entirely on the release of one data point, and may even react to the rounding of decimal points on the economic data screen... During his first press conference, Waller told the market that he did not want to overemphasize digits after the decimal point, but now, it is precisely those digits that will become the decisive factor. Waller's speech on Thursday was unexpectedly dovish, supporting our view that compared to the heads of the regional Federal Reserve Banks, committee members—though not entirely unanimous—tend to be generally dovish; however, apart from implicitly confirming that a core CPI reading of 0.3% would support a rate hike, his speech offered virtually no new information. The market seems to be using 0.25% as a dividing line for whether data is above or below expectations, but after the employment report is released, if the month-on-month increase in core CPI meets expectations at 0.2%, it is difficult to see a meaningful rally in the market. With the current meeting being priced at more than a 50% probability of a rate hike, the risk that the bond market interprets a hold as a policy mistake seems much greater than the harm caused by a rate hike due to inflation exceeding the target.