Emerging-market assets have rallied following the release of data showing a slowdown in U.S. inflation. The Consumer Price Index (CPI) fell by 0.4% month-over-month, bringing the annual rate to 3.5%, while core CPI remained flat. These figures have strengthened market expectations that the Federal Reserve would not need to raise rates in the near term. The implied probability of a rate hike at the September 2026 meeting has dropped to 28%, down from 31% twenty-four hours earlier. The probability for the October 2026 meeting has also declined to 39.5%.
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