Investing.com - Latest US Inflation Data Analysis: Impact on Market Expectations and Federal Reserve Decisions
In a recent report, Wall Street analysts discussed the implications of the latest US inflation data on upcoming Federal Reserve decisions and market expectations. Consumer prices rose by 2.5% over the past 12 months to August, showing a slower pace compared to February 2021 and down from 2.9% in July.
Vital Knowledge analysts suggested that the inflation report may reduce expectations for a 50 basis point rate cut next week, but it is unlikely to change the Fed's overall stance significantly. They anticipate a dovish approach from the Fed, even if they start with a smaller 25bp rate cut on 9/18.
Capital Economics acknowledged that inflation seems to be under control, but highlighted the potential complications of persistent housing inflation on the Fed's plans. They expect the Fed to take a measured approach to interest rate cuts, as inflation has not been completely eradicated.
Oppenheimer focused on food inflation, noting a slight deceleration in food-at-home inflation. They described the inflation backdrop as a modest negative for grocers but pointed out the potential for a more favorable setup in consumer staples with lower rates.
Citi indicated that the latest inflation figures might lead the Fed to opt for a 25bp rate cut instead of 50bp. They forecast continued rate cuts into November and December based on the benign outlook of core PCE inflation.
Morgan Stanley agreed with the 25bp rate cut projection, citing a modest inflation surprise driven by services. They mentioned that more aggressive cuts are unlikely this year.
Evercore ISI described the CPI report as dishearteningly high, driven by gains in rents and airline fares. They expect higher Treasury yields in the near term but remain optimistic about lower rates in the future.
Overall, while the inflation data slightly exceeded expectations, most firms anticipate the Fed will choose a smaller rate cut. The analysis indicates a cautious approach to interest rate adjustments in light of the current economic conditions. Title: Unveiling the Top Investment Strategy for Maximizing Profits in Today's Financial Market
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