US CPI Inflation Report In The Spotlight
October’s US CPI inflation report, due later today, draws the attention of investors and traders across the world. Some analysts suggest that headline inflation is likely to come in at 3.3% on a yearly basis, thus continuing its slide in the last few months.
However, they also note that inflation could remain sticky at around 3% in the next months, prompting the US Federal Reserve (Fed) to take more action. Commenting on today’s data release, Commerzbank’s economists wrote in their report: “Inflation would have to surprise quite notably to the upside to provide significant positive momentum for the US dollar.”
Data coming from the Office for National Statistics (ONS) showed that UK vacancies dropped for the 16th straight month but still remainied above pre-pandemic levels. ONS analysts stressed that “with inflation easing in the latest quarter, real pay is now growing at its fastest rate for two years.”
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US CPI October Report
The US Bureau of Labour Statistics (BLS) is expected to release data regarding the country’s CPI inflation later in the afternoon. Market analysts forecast inflation to come in at 0.1% on a month-to-month basis. If the number is to be confirmed, it will be significantly lower than September’s 0.4% figure.
Core CPI inflation that excludes food and energy is forecast to remain at 4.1% on an annualised basis and 0.3% on a monthly basis. Some economists suggest that a lower headline inflation figure in October could boost equity prices and put some pressure on the US dollar.
UK CPI October Report
The Office for National Statistics (ONS) will take turns on Wednesday as it is expected to announce the UK CPI figures for the month of October. High inflation figures earlier in the year as well as rising interest rates have weighed on the Bank of England monetary policy, with the government evaluating ways to generate economic growth.
Economists suggest that headline inflation could come in at 4.8% on a year-to-year basis and 0.1% on a monthly basis. Economists at ING suggest that “barring any enormous upside surprises in both the services inflation and wage figures next week, we think the Bank will be comfortable with keeping rates unchanged again in December."
Oil Prices Rise By 1% On The Back Of OPEC+ Report
The Organization of Petroleum Exporting Countries and its allies (OPEC+) revised upwards global oil production, countering concerns linked to a weak Chinese economy, which could hurt oil demand.
On the contrary, a report from the US Energy Information Administration (EIA) said that US oil production would rise less than expected previously, blaming lower demand.
Morgan Stanley And Goldman Sachs Disagree Over Future Rate Cuts
Morgan Stanley economists expressed their belief that the Federal Reserve would start cutting interest rates beginning in June 2024, moving forward with 25 basis points (bps) rate cuts from the last quarter of the year onward.
On the contrary, analysts at Goldman Sachs suggested that the Fed would start with an initial 25 bps rate cut during the fourth quarter of 2024 and proceed with small rate cuts until mid-2026.
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