Today’s Fed Inflation Report Could Decide If Interest Rates Rise in September

TLDR

• July CPI data due Wednesday is expected to show 0.1% monthly rise and 3.4% annual rate
• Core inflation is forecast at 0.2% monthly and 2.5% annually, both still above the Fed’s 2% target
• The Fed voted 9-3 to hold rates at 3.5%-3.75% at its July meeting, with three dissenters wanting a hike
• Fed Chair Kevin Warsh faces pressure to act if inflation stays stubborn, with markets pricing September as a 50-50 call for a rate hike
• Bank of America still expects three rate hikes in coming months if inflation does not cool

Wednesday’s consumer price index report is one of the most closely watched inflation prints in months. It could decide whether the Federal Reserve raises interest rates in September or waits longer.

Most inflation forecasters see the core CPI rounding down to 0.2% in July.

Given recent Fedspeak, the next few months of the core PCE inflation measure could be important in determining whether policymakers maintain their forecast of gradual disinflation with no policy change. pic.twitter.com/BzyjmginXr

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