Market movers today
In the US, CPI inflation for August will attract more attention than usual given that they will give the Fed its last impression of underlying price pressure before the FOMC meeting on 19-20 September. Out of the past five months, CPI headline has fallen in three and the weak numbers seem to be very broad based. In August, we estimate energy contributed around 0.1pp to the headline figure on top of our expectation of an increase in core CPI of 0.1% m/m. Thus, we estimate CPI headline to come in at 0.2% m/m (1.7% y/y, unchanged from July) and CPI core at 0.1% m/m (1.5% y/y vs 1.7% in July). Note that the fall in CPI core y/y is driven by an increase of 0.3% m/m in August last year, which falls out of the yearly increase in August this year.
In the UK, the Bank of England (BoE) meeting will be in focus. We expect BoE to keep the Bank Rate unchanged at 0.25% with an unchanged vote count of 7-2. It is one of the small meetings without an updated Inflation Report and a press conference, so we have to look for any changes to the policy stance in the minutes. It is not our expectation that the BoE will change its tone significantly, as the economy has developed more or less in line with the expectations set out in the latest Inflation Report of 3 August (see Bank of England Review: More dovish but still too optimistic on growth , 3 August 2017), but the BoE may address the weaker GBP. We still expect the bank to remain on hold throughout the Brexit negotiations, which is also what markets have priced in.