The market expects the Federal Reserve to "stand still" this week, with a 29% chance of raising interest rates in November. The economic situation is still unclear.

The Federal Reserve will hold a two-day interest rate meeting starting on Tuesday (September 19), and will announce an interest rate decision and policy statement in the early morning of Wednesday, U.S. time (Thursday, Beijing time). After raising interest rates by 25 basis points in July, the target range for the U.S. federal funds rate is already at 5.25%-5.5%, reaching the highest level in 22 years. The latest inflation data in the United States showed that CPI increased by 3.7% year-on-year in August, slightly higher than market expectations of 3.6%, and the previous value was 3.2%; core CPI increased by 4.3% year-on-year, the same as market expectations, and the previous value was 4.7%. According to data from the CME Group's "Fed Watch" tool, the market currently predicts that the probability of the Fed "holding fire" this time is as high as 99%.

Analyzing from the following aspects, first of all, in terms of inflation, although the US CPI rebounded in August, it was mainly due to the rising transmission effect of international oil prices and seasonal factors on gasoline prices, energy services and related transportation service inflation; core commodity inflation and housing inflation continued to fall month-on-month, indicating that the general trend of U.S. core inflation continuing to slow down has not changed. Secondly, in terms of the labor market, the U.S. non-farm job market continued to cool in August, the unemployment rate rose more than expected, and the hourly wage growth fell more than expected. In addition, the number of job vacancies fell rapidly in July, and the employment gap narrowed significantly. The cooling trend of the labor market has been confirmed. Further confirmation. In addition, August consumption data also supports the suspension of interest rate hikes. The unexpected rise in retail sales in August was mainly driven by the rise in oil prices, while the actual consumer demand of residents was relatively weak. The growth rates of retail, leisure and service consumption all fell back in August. If the impact of oil prices is excluded, the retail sales growth rate was only 0.2% month-on-month. It was lower than the 0.5% growth rate in July. As a result, the Federal Reserve will skip raising interest rates this month and adopt a wait-and-see policy stance. The probability of raising interest rates at the November meeting is expected to be 29%. In addition, the Bank of England and the Bank of Japan will also announce their latest interest rate decisions on Thursday and Friday respectively, which deserve investors' attention.

However, according to another analysis, if the U.S. federal government agencies are shut down for a long time due to funding issues at the end of this month, it will make it unlikely that the Federal Reserve will raise interest rates in November. Libby Cantrill, director of public policy at PIMCO, pointed out that if the U.S. government falls into a shutdown, it is unlikely to be reopened in the short term. Disagreement within the Republican Party makes the time for the government to reopen unclear. She believes that once the government shuts down, no new economic data will be released, and it will be difficult for the Federal Reserve to make a decision to raise interest rates under such circumstances.