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summary:
Bank of America expects a modest rise in both the headline and core CPI for September, suggesting flat core inflation with no immediate cause for concern.
Key points:
CPI Outlook: Bank of America expects a 0.1% MoM increase in the headline CPI and a 0.3% MoM rise in the core CPI. An expected decline in energy prices is expected to moderate the headline reading, while firmer rents and higher used car prices will contribute to a firmer headline reading.
Year-on-Year Outlook: On a year-over-year basis, Bank of America expects the headline CPI to decline by two-tenths to 2.3%, with the core CPI remaining stable at 3.2%. The main NSA index is expected to be printed at 314.827.
Implications for Core PCEs: Based on CPI forecasts and inflation trends for the Producer Price Index components of PCEs, Bank of America expects core PCE inflation at 0.18% per month. While this would be a positive outcome, it does not indicate a radical change in inflation dynamics that would affect the size of the next Fed rate cut.
Bottom line: Bank of America suggests that while inflation continues to trend in the right direction, the upcoming CPI report will likely not significantly change the Fed’s course. The results support the possibility of further cuts in interest rates but do not cause concern about inflation levels at this time.
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