The U.S. Bureau of Labour Statistics has released the August consumer price index (CPI) data today, which showed that U.S. inflation rose 3.7% at an annual rate, as compared to the consensus estimate of 3.6%. The latest data showed that inflation has been moving upward for two consecutive months. Notably, the CPI in July jumped 3.2% in July, up from 3% in the prior month, the coolest pace since March 2021.
The core inflation, excluding food and energy prices, surged 4.3% YoY, in line with the expectation, and down from 4.7% in the prior month. On a seasonally adjusted basis, the inflation rose 0.6% in August, after a jump of 0.2% in July.
The market participants eagerly awaited the release of the CPI data, as it was seen as a critical factor in shaping the future stance of the U.S. Federal Reserve regarding their plans for raising interest rates. Notably, the U.S. Federal Reserve had announced a 25 basis point rate hike in the prior month. Although many analysts believed that the Federal Reserve might reconsider its aggressive approach, investors remained cautious.
JPMorgan, Goldman Sachs, Bloomberg, Morgan Stanley, RBC, and Wells Fargo had anticipated the CPI to be at 3.6%. On the other hand, other Wall Street players such as Visa and CIBC were expecting a 3.5% surge, while Barclays and Citi predicted a 3.7% increase in the CPI for the previous month.
According to the CME FedWatch Tool, there was a 91% probability of the Federal Reserve announcing a pause at the upcoming FOMC meeting scheduled for September 20. Additionally, Wall Street analysts also considered the possibility of a rate hike by the end of the year. Notably, following the release of the CPI data, the U.S. dollar index (DXY) experienced a 0.07% increase, rising to 104.79.
