CPI Preview: Hot Report Could Signal Inflation Heading Back to 5% in Months Ahead
U.S. stock investors are turning their focus to today's highly anticipated inflation data, which could determine the near-term path of an equity rally that has wobbled in recent weeks.
After coming within 4% of its January 2022 all-time high at one point during the summer, the benchmark S&P 500 has come under pressure amid worries that restrictive interest rates will be in place for longer than expected.
Ahead of the report, financial markets saw an 88% chance of the Fed holding rates at current levels in November, according to Investing.com’s Fed Rate Monitor Tool, and a 12% chance of a quarter-percentage point rate hike.
For December, they are pricing in a more divided 70% chance for a pause and a 30% chance of a rate increase.
With the U.S. central bank being data-dependent, today's CPI inflation data takes on extra importance as investors weigh what the Fed will do next.
The U.S. government will release the September CPI report today at 8:30AM ET and the numbers will likely show that prices continue to increase far more quickly than what the Fed would consider consistent with its 2% target range.
As per Investing.com, the consumer price index is forecast to rise 0.3% on the month after edging up 0.6% in August. The headline annual inflation rate is seen rising 3.6%, slowing from a 3.7% annual pace in the previous month.
CPI peaked at a 40-year high of 9.1% last summer, and has been on a steady downtrend since. Still, numbers are still rising at a pace far more quickly than what the Fed considers healthy.
Meanwhile, the September core CPI index — which does not include food and energy prices — is expected to rise 0.3% on the month, matching the same increase in August. Estimates for the year-on-year figure call for a
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