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Key Inflation Report to Shape Fed's Next Move
11 Sep
Summary
- August CPI data is crucial for the Fed's September interest rate decision.
- Economists expect a slight rise in overall inflation but a slower annual pace.
- Core inflation, excluding food and energy, is predicted to show minimal growth.
The Federal Reserve will closely analyze Friday's August inflation report to guide its interest rate decision for the upcoming Sept. 15-16 policy meeting. Recent data indicated weakening price growth after a May peak, largely influenced by gasoline prices. If August's report shows continued moderation, the Federal Open Market Committee may opt to maintain the current fed-funds rate.
Economists project that inflation climbed 0.4% in August, with an annual rate slowing to 3.3%. Core CPI, excluding volatile food and energy costs, is expected to have grown by 0.2% monthly and 2.4% annually, marking a five-year low. This data, alongside producer price index figures released Thursday, offers a preview of the personal consumption expenditures price index.
While core consumer goods inflation is anticipated to be less of a concern, core services inflation may show persistent growth. Factors like rising jet fuel prices are expected to drive up transportation services costs. The Fed has entered a blackout period, meaning markets will not receive further guidance from officials before the policy decision.
