The August inflation report will be one of the final reports the Federal Reserve Policy-Making Committee (FOMC) will consider at their meeting on September 19-20.
Consumer Price Index (CPI) data for August will be released later today by the Bureau of Labour Statistics (BLS).
The anticipated data will give market enthusiasts a glimpse into August inflation, and should provide insights into the possible moves the US Federal Reserve may make in the next few months.
CPI data: what to expect
Since mid-July, the US dollar has maintained a bullish view, outperforming its rivals. The relative growth of the US economy under tight labour conditions may shape the outlook of the August CPI data.
The August inflation report will be one of the final reports the Federal Reserve Policy-Making Committee (FOMC) will consider at their meeting on September 19-20. The meeting will decide if another interest rate increase is needed to subdue inflation.
Fed Chair Jerome Powell has maintained that the Fed is prepared to raise interest rates if need be.
“Inflation remains too high, the process of bringing down inflation still has a long way to go, even with more favorable recent readings,” Powell said.
According to consensus estimates from FactSet, the CPI increased at a 3.6% annual pace in August, up from the 3.2% annual pace recorded in July. That would be the second consecutive month that headline inflation rose, reflecting both the growing cost of gas and how price growth is measured in relation to prices from a year earlier.
According to economists’ predictions, headline inflation increased 0.6% in August compared to a 0.2% increase in July.
Analysts at Danske Bank provide a brief preview of the key macro data and explain: “The August CPI marks the final key data release ahead of the September FOMC meeting. We expect the easing wage pressures to translate into further cooling in core services prices, and forecast another core CPI print at +0.2% m/m. While an unchanged rate decision is the clear base case for both us and the markets, the focus will be on the updated ‘dots’ where a low inflation reading could push some participants to revert their June call for one more hike later in the year.
In order to curb inflation, which soared to a 9.1% increase in June 2022—the biggest annual price increases in four decades—the Federal Reserve has been aggressively raising interest rates. Fed officials would be comfortable that they’re on the way to achieving their 2% goal for annual inflation with a 0.2% monthly growth pace.
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