Given an undershoot in the wholesale inflation data last night, many still believe there is a potential for a resurgence in inflation, and the odds still rest on holding an unchanged rate until September 2025. With that, high anticipation built upon the consumer price index for more clarification on the progress of inflation.
The consumer price index, as an inflation measurement from the consumer side, is now widely expected to have a higher projected reading of 0.4% monthly and 2.9% annually tonight. So if CPI really confirms a return of inflation and with recent strong economic growth, then the Federal Reserve will very likely stay hawkish once again, especially with the potential tariff inflation that is coming closer day by day.
Some FED members already sent a hawkish statement, citing that the December rate cut is the last cut while investment bankers are starting to support the degree of rate cut reduction. Meaning that they are already prepared for the worst-case scenario, and all left is the rate decision from the Federal Reserve.
Moreover, we will also hear other inflation data from the United Kingdom, France, and Spain. As per the purchasing managers’ index report from either the UK or the Eurozone, they are mainly concerned with inflation as well, which is mostly seen through an increase in wage growth while seeing some downturn in the manufacturing sectors. And now the consumer price index projection from these economies are now walking in line with the PMI report.
