August CPI: Fed's Last Inflation Read Before Rate Decision — SkimNews
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- Bureau of Labor Statistics will release the August CPI report at 8:30 a.m. Friday, with Dow Jones consensus expecting 0.4% monthly headline inflation (3.4% annual) and 0.2% monthly core (2.4% annual).
- Federal Reserve policymakers will combine the CPI with Thursday's PPI data to project the PCE price index, their primary inflation gauge due at the end of September.
- Nomura economists said the September FOMC decision "ultimately hinges on the CPI data" since most PCE components derive from CPI, with a tenth of a percentage point potentially meaning the difference between a hold and a rate hike.
- CME Group's FedWatch gauge showed traders raising quarter-point hike odds above 73% after Thursday's PPI release, though expectations have been volatile amid fluctuating energy prices.
- Fed Chair Kevin Warsh has signaled reliance on market indicators for monetary policy direction, intensifying the data-sensitive stakes for next Wednesday's FOMC meeting.
- Fifth Third Bank's Bill Adams said September's energy price surge will "likely tip the balance towards a hike," while noting a CPI surprise or a "last-minute deal with Iran" could still shift the outcome.
Why it matters: A single CPI print could flip the Fed from holding rates to a 25-basis-point hike, directly reshaping borrowing costs for consumers and businesses — and energy prices, not just core inflation, are emerging as the decisive swing factor ahead of next Wednesday's decision.
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