August CPI: Fed's Final Inflation Read Before Rate Decision — SkimNews
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- Bureau of Labor Statistics will release the August consumer price index report Friday at 8:30 a.m., the final inflation data point before the Fed's interest rate decision next week.
- Dow Jones consensus expects all-items CPI rose 0.4% month-over-month in August with annual inflation at 3.4%, while core inflation is forecast at 0.2% monthly and 2.4% annually.
- Nomura economists said the September FOMC decision "hinges on CPI data" because most PCE components derive from CPI, warning an upside surprise would "significantly increase the likelihood of policy firming next week."
- CME Group's FedWatch gauge showed traders raising odds of a quarter-point hike to more than 73% after Thursday's wholesale PPI release.
- Fed Chair Kevin Warsh has indicated a reliance on market indicators for monetary policy direction, raising the stakes on how traders interpret Friday's print.
- Bill Adams of Fifth Third Commercial Bank said September's surge in energy prices likely tips the Fed toward a hike, though a big CPI surprise or "a last-minute deal with Iran" could still shift the outcome.
Why it matters: With the FOMC's rate call described as potentially hinging on a tenth of a percentage point and traders already pricing 73%+ odds of a quarter-point hike after Thursday's PPI, Friday's CPI could directly flip the Fed from holding to hiking — reshaping borrowing costs, mortgage rates, and Treasury yields within days.
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