US CPI: Current inflation environment is just what the Fed wants to see - Wells Fargo
|Today’s data showed that the CPI rose 0.2% in August while the annual rate eased from 2.9% to 2.7%. Analyst at Wells Fargo considered that core inflation came in a bit soft, but they see the trend remains gradually higher and should keep the Federal Reserve on track to more rate hikes.
Key Quotes:
“August consumer price inflation came in a bit softer than markets were expecting, with headline CPI increasing 0.2% and the core advancing 0.1%. The modest gain in core inflation comes on the heels of a strong print for July (0.24% before rounding), and does not shake our confidence that the underlying trend in inflation remains upward given rising input costs, including labor.”
“Where we see more risk of a near-term slowdown is outside the core index. While a 1.9% increase in energy prices helped lift the headline in August, we expect oil prices to decline through the end of the year, before rising again in 2019. Food prices ticked up 0.1% last month as the cost of eating out rose 0.2%.”
“In many ways, the current inflation environment is just what the Fed wants to see. Core inflation has slowly moved back up to levels consistent with the FOMC’s target. Yet there are few signs of inflation blowing far past the Fed’s comfort zone and forcing the Fed to raise rates faster than expected; inflation expectations—especially longer-term views—have been little changed. We see core CPI running around 2.3% through the rest of this year before picking up in 2019.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.