Notes from the Desk | US CPI – Heading in the Right Direction
US CPI decelerated by more than forecast as the recent drop in energy prices offset higher food costs.
- YoY CPI – 7.1% vs 7.3% expected
- YoY core CPI – 6% vs 6.1% expected
Implications:
With inflation still far above 2% and labour markets tight, we expect the Federal Reserve to raise rates by 50bps tomorrow. Equities and bond markets are reacting positively to the news as they anticipate that the rate hike cycle is drawing to a close.
