All eyes are now on the US Consumer Price Index (CPI) data that is due later this evening. This will offer insights into whether the Federal Reserve's rate hikes are helping ease sticky prices.

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The release of closely watched US inflation data, today, is likely to set the tone for markets, after stronger-than-expected jobs data last week.

“Markets are trading on the basis that rates will be cut. If you look at all the forward-looking expectations in the US, the market is pricing in about 3-4 rate cuts by February 2024. However, we will have to wait and see whether that is going to happen or not,” said Rana Gupta, Senior Portfolio Manager, India-Equity Specialist at Manulife Investment Management, in interaction with CNBC-TV18.

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The US Fed has signaled it may pause further increases, giving officials time to assess the fallout from the bank failures, wait on a political resolution to the US debt ceiling, and monitor inflation.

Also Read | Oil prices dip in cautious trade ahead of US inflation data

Although investors initially cheered the possibility of a pause, their confidence waned as Federal Reserve Chair Jerome Powell spoke, clarifying that inflation remains the chief concern and that it is too soon to say with certainty that the rate-hike cycle is over.

(with inputs from Reuters)

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