The Last Number Before the Fed Decision
Today at 2:30 PM Central European Time, the US Bureau of Labor Statistics releases the August inflation figures. It's the last major economic data point before the Fed's rate decision on September 16 — and it will decide whether rates go up or not.
The expectation: 3.4% annual inflation, exactly like July. But the last three months showed: inflation is rising again. From 2.9% in June to 3.0% in July, now August. If today's number comes in higher than 3.4%, the Fed will be forced to act.
Why This Matters to You
If the Fed raises rates, here's what happens:
- Your savings account earns more — good for savers.
- Stocks fall — because higher rates make bonds more attractive and companies face higher borrowing costs.
- Tech stocks suffer the most — because their valuations are based on low rates. NVIDIA, Apple, Microsoft could lose 5-8%.
- Your monthly ETF contributions buy more shares — corrections are opportunities for long-term investors.
I remember 2022, when the Fed raised rates from 0% to 4.5%. My portfolio was down 18% — on paper. I didn't sell. Today it's 40% higher than back then. Paper losses only become real when you sell.
What Professionals Are Watching Today
Large investors aren't just looking at the headline number, but at core inflation (excluding energy and food). It's expected at 2.5% for August, after 2.5% in July. If it jumps to 2.6% or higher, that's a signal: inflation isn't just oil-driven, but broader.
Also: At the last meeting in July, the Fed voted 9 to 3 to keep rates unchanged. Three members wanted to raise already then. If inflation comes in higher today, those 3 dissenters could become the majority.
ECB President Christine Lagarde said yesterday: "We're closely watching US data." Europe often follows the Fed — with a 2-3 month lag.
What This Means for Beginners
If you're just starting to invest, today is a good day to learn: Markets react to expectations, not reality. The number at 2:30 PM is just a number — but it changes what millions of investors think about the future.
My advice, which I gave my daughter Lena last week: "No matter what happens today — your monthly ETF savings plan continues. If the market falls, you buy cheaper. If it rises, you're happy about your existing portfolio. You can only win if you stay the course."
That's as true today as it was in 2000, when I watched the T-Aktie fall from 100 to 8 euros. Back then I panic-sold — that was my mistake. Today I know: Patience beats timing.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.