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U.S. inflation outlook: CPI projected to rise 3.6% YoY in September

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The US Consumer Price Index (CPI) is anticipated to increase by 3.6% year-on-year in September, a development that could impact the valuation of the US Dollar and potentially alter the Federal Reserve’s interest rate perspective. This projection aligns with the CME Group (NASDAQ:) FedWatch Tool’s estimate of a nearly 70% likelihood that the policy rate will remain steady at 5.25%-5.5% in 2023, despite an uptick in US Treasury bond yields.

Federal Reserve Governor Michelle Bowman has underscored the significance of CPI inflation data, advocating for a restrictive level interest rate to bring inflation back to the 2% target. This statement corresponds with the September jobs report, which documented a surge of 336,000 in Nonfarm Payrolls.

In addition to the monthly CPI, the Core CPI is also predicted to increase by 0.3%. West Texas Intermediate, a benchmark for oil prices, registered a 9% gain in September. However, future geopolitical developments could influence both the inflation outlook and the Fed’s monetary policy.

Analysts at Australia and New Zealand Banking Group (ANZ) are forecasting a 0.2% month-on-month rise in core inflation, an expectation that has been positively acknowledged by the Federal Reserve. Meanwhile, the Prices Paid Index of the ISM Manufacturing PMI survey displayed a significant drop to 43.8 in September from 48.4 in October, signaling rapidly decreasing input prices within this industry.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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