Notes from the Desk – US Inflation – The Last Mile is a Tough Slog.
US August CPI came in a touch warmer than expected largely due to higher gas prices.
By the numbers.
- YoY CPI 3.7% (3.6% expected)
- YoY core inflation 4.3% (4.3% expected)
- Core Services less housing was up 0.37% MoM which is the highest gain since March.
While Chairman Powell won’t be happy seeing Core Services ex-housing showing some strength last month, today’s data does little to change the odds of a hike (or pause) next week. As a result, we don’t see this having a material impact on rates.
Looking further ahead, the stubbornness of core inflation will keep the Federal Reserve poised to hike further if required and keep rate cuts off the table for some time.