#美国9月PPI年率升至6.3% U.S. inflation data for September dealt markets a one-two punch over two consecutive days. CPI rose to 3.7% year over year, while core CPI reached 2.6%. Then PPI came in even hotter, surging 6.3% year over year and 1.3% month over month—both well above expectations. Energy was the main driver, but core measures were also elevated, suggesting price pressures are starting to spread more broadly rather than being driven solely by oil prices.
After the data came out, market expectations for the Fed shifted quickly. The probability of a rate hike at the October meeting briefly approached 50-50 after the CPI report, then fell back to around 20%. Markets now lean toward the Fed holding steady, while the odds of another hike in December are considerably higher. At least one more hike this year has become the prevailing view.
Interest rates are currently in the 3.75%-4% range, after a hike in September. Chair Warsh has repeatedly stressed in public that “price stability must be achieved,” while deliberately offering no guidance on the path ahead. Most other officials also think another move will be needed this year, though there is no need to rush into action in October. The labor market is still holding up, so the Fed is not yet backed into a corner.
The real uncertainty is how long energy prices will remain high and whether PPI’s heat will continue to feed through to CPI. If core inflation stays sticky or rises further, a December hike will be all but a foregone conclusion. If geopolitical tensions ease and oil prices fall, the timing could be pushed back. With the midterm elections approaching, policymakers will communicate more cautiously, but the data have already put the option of another rate hike this year back on the table.
In short, signs of inflation picking up again are fairly clear. The odds of another hike this year are not low, but December is a more likely target than the end of this month. Next, watch how PCE and employment data develop. $ETH
After the data came out, market expectations for the Fed shifted quickly. The probability of a rate hike at the October meeting briefly approached 50-50 after the CPI report, then fell back to around 20%. Markets now lean toward the Fed holding steady, while the odds of another hike in December are considerably higher. At least one more hike this year has become the prevailing view.
Interest rates are currently in the 3.75%-4% range, after a hike in September. Chair Warsh has repeatedly stressed in public that “price stability must be achieved,” while deliberately offering no guidance on the path ahead. Most other officials also think another move will be needed this year, though there is no need to rush into action in October. The labor market is still holding up, so the Fed is not yet backed into a corner.
The real uncertainty is how long energy prices will remain high and whether PPI’s heat will continue to feed through to CPI. If core inflation stays sticky or rises further, a December hike will be all but a foregone conclusion. If geopolitical tensions ease and oil prices fall, the timing could be pushed back. With the midterm elections approaching, policymakers will communicate more cautiously, but the data have already put the option of another rate hike this year back on the table.
In short, signs of inflation picking up again are fairly clear. The odds of another hike this year are not low, but December is a more likely target than the end of this month. Next, watch how PCE and employment data develop. $ETH