Fed’s core inflation comments could move markets despite likely rate hold - Fifth Third’s Adams

Kitco Media
By Ernest Hoffman
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Fed’s core inflation comments could move markets despite likely rate hold - Fifth Third’s Adams teaser image

(Kitco News) – Even if the Federal Reserve holds rates unchanged as expected, any comments relating to the United States’ core inflation rate could cause a significant repricing of rate expectations, yields and gold, according to Bill Adams, Chief U.S. Economist at Fifth Third Commercial Bank.

Adams told Kitco News that the Federal Open Market Committee’s expected rate hold this afternoon would mark the fifth consecutive meeting with no change since the Fed’s last cut in December 2025, but the attention of investors and traders will be focused on the central bank’s reading of price pressures.

“Financial markets will likely focus on the Committee’s assessment of core inflation, since the Fed ended forward guidance after Kevin Warsh became Chair,” he said. “The policy statement will likely lay out another mixed picture of inflation’s drivers. On the one hand, good news from relatively tame house prices and rent increases, and from the dissipating impact of 2025’s tariff hikes. On the other, bad news from rebounding energy prices as disruptions to Mideast and Russian exports resurface; new tariffs; AI-related pressure on electronics prices; and labor supply bottlenecks pushing up prices of services like home health care and nursing care.”

“If the Committee or Chair Warsh offer even an inkling of guidance, they likely will indicate that the decision between holding rates steady or hiking in September will be data dependent.”

At the time of writing, the CME’s FedWatch tool shows a 64.2% chance of a rate hold at this afternoon’s meeting, with a 35.8% probability of a 25 basis point hike.

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Kitco Media

Ernest Hoffman

Ernest Hoffman is a Crypto and Market Reporter for Kitco News. He has over 15 years of experience as a writer, editor, broadcaster and producer for media, educational and cultural organizations. Ernest began working in market news in 2007, establishing the broadcast division of CEP News in Montreal, Canada, where he developed the fastest web-based audio news service in the world and produced economic news videos in partnership with MSN and the TMX. He has a Bachelor's degree Specialization in Journalism from Concordia University. You can reach Ernest at 1-514-670-1339.

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