Thursday’s CPI report could give Fed doves more ammunition


A soft inflation number would be cover to ease

A soft inflation number would be cover to ease

The top US economic data point for the week is due on Thursday at 1230 GMT.

The September CPI report is one of the final economic data points ahead of the FOMC meeting. The consensus is for a 0.1% m/m rise, the same as in August. That would put the y/y rate at 1.8%.

However the Fed will also be closely watching the numbers that exclude food and energy. That measure is forecast up 0.2% m/m and 2.4% y/y.

The latter number is one that is (or should be) giving the Fed pause about cutting rates. A surprisingly strong reading still may not be enough to stop an October cut, even though several Fed members highlighted inflation in the latest minutes as the justification for cutting.

On the flipside, if the data is soft then it might solidify a cut even if the US and China agree to some kind of ceasefire. What makes a downside miss a bit more likely is that this week’s PPI data was extremely soft. That could be due to difficulties in adjusting for tariffs. That’s something that applies more to producer prices but could still be a factor.



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