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Stronger US CPI Has Kept Rate Expectations Unchanged So Far

ByFxPro Financial Services Ltd
AuthorAlexander Kuptsikevich
Published 09/13/2023, 10:17 AM
Updated 03/21/2024, 07:45 AM

The latest US report was a reminder that the fight against inflation will not be easy. We would guess that the most challenging period for the authorities has just begun.

US CPI rose by 0.6% m/m and 3.7% y/y


In August, the US CPI rose by 0.6% m/m, taking the annual rate to 3.7%. The latest reading was above the average forecast (3.6%) and accelerated from 3.0% in June and 3.2% in July. Roughly half of the price rise can be explained by the increase in fuel prices. Since the end of August, exchange-traded oil prices have regained their upward momentum, which could pose a problem for the monetary authorities in the coming months.

The core price index - excluding energy and food - rose by 0.3% m/m after two months of 0.2% growth. The annual rate of increase slowed from 4.7% to 4.3%. Although the annual rate continues to fall, it remains elevated. Core inflation rose by 1.8% over six months. That's double the average annual rate ten years before the pandemic.

Core CPI rose by 0.3% m/m while slowing to 4.3% y/y


Interestingly, the new release seems to have only reinforced the markets' view that the Fed is done raising rates. The odds of keeping rates on hold in November rose to 57% from 53% a week earlier, hardly in keeping with the picture painted by the more robust recent inflation data.

The FxPro Analyst Team

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