The U.S. Federal Reserve (Fed) may pause raising interest rates. According to the CME FedWatch tool, the probability of the U.S. Federal Reserve suspending interest rate hikes after the latest Consumer Price Index (CPI) report is more than 90%. Earlier, new inflation data showed that the annualized inflation rate was lower than expected at 3.3%.

The market is widely expected to put an emergency brake on the Federal Reserve after July's CPI data showed that inflation rose less than expected. Specifically, annualized inflation last month was 3.2%, lower than market expectations of 3.3% and June's 3%.

Although the annualized CPI of 3.2% was the first increase since the Federal Reserve began raising interest rates last year, the overall report showed that inflationary pressures are weakening, reducing the pressure on the central bank to continue raising interest rates. However, although the Fed may temporarily pause raising interest rates, considering that the CPI is still significantly higher than the ideal 2% level, the Fed is unlikely to start cutting interest rates in the short term.