According to the US Consumer Price Index (CPI) statistics for August, the core index excluding food and energy increased more than expected from the previous month, leaving room for further interest rate hikes by the US Financial Authority.
US core CPI accelerates month-on-month for the first time in six months in August – paving the way for further interest rate hikes within the year (2)
The views of market participants regarding the August CPI are as follows.
◎Mr. Seema Shah, Chief Global Strategist at Principal Asset Management
The numbers aren’t enough to tilt next week’s Federal Open Market Committee (FOMC) meeting toward a rate hike, but it also doesn’t completely eliminate the question of whether the FOMC will suspend or raise rates at its November meeting. Given the recent rise in energy prices, the rise in the headline CPI is not surprising, and the monetary authorities are unlikely to care about this number. However, core inflation was widely expected to remain flat, if not slow. As such, an upside surprise will likely leave a sour taste in the minds of monetary authorities, who will not let go of the idea that there is still work to be done.
◎Alex McGrath, Chief Investment Officer (CIO) of North End Private Wealth
The August CPI data is unlikely to have a significant impact in the short term. However, if the CPI remains at high levels in September and October, we believe the US Federal Reserve is likely to raise rates one more time.
◎Chris Zaccarelli, CIO of Independent Advisor Alliance
While this is not the Goldilocks-like number that investors were hoping for, the market could still trade within a range. Inflation is high enough for the Fed to continue acting, but not high enough to reverse the “the Fed’s job is almost done” scenario. As long as the economy remains strong and inflation does not flare up again, prices could rise through the end of the year after the seasonally weak months of September and October.
◎Florian Ierpo, Head of Macro Research at Lombard Odier Asset Management
The August CPI statistics will allow the US financial authorities to more comfortably take a wait-and-see attitude. Inflation, which was slightly higher than expected, was due to fluctuations in energy prices, so there is no need for monetary authorities to be overly concerned at this point.
◎Mitten Group fund manager Hugh Greaves
Although the headline CPI accelerated for the second straight month compared to the same month last year, the US financial authorities will likely be relieved that the core CPI continued to slow compared to the same month last year. Their concern is that rising energy costs will begin to ripple through the economy, raising the risk that core inflation will rise again towards the end of the year, forcing further interest rate hikes.
Original title:Stocks Rise as CPI Not a ‘Game Changer’ for Fed: Markets Wrap(excerpt)
2023-09-13 14:58:53
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