US August CPI may determine whether the Fed starts its first rate hike in over three years, with the probability of a September hike currently around 70%.

BlockBeats news, September 11 — The U.S. Department of Labor will release August CPI data at 20:30 Beijing time tonight. The market expects headline CPI to rise 0.4% month-on-month and 3.4% year-on-year; core CPI is expected to rise 0.2% month-on-month and 2.4% year-on-year. The data will serve as an important reference for whether the Federal Reserve raises rates next week for the first time in more than three years. The Fed's last rate hike was on July 26, 2023, when it raised rates by 25 basis points, lifting the federal funds rate target range to 5.25%—5.50%.

U.S. August PPI rose 5.4% year-on-year, higher than July's 4.8%; at the same time, the Iran war pushed U.S. oil prices above $100 per barrel, and combined with transportation, supply chain, and tariff cost pressures, the Fed will focus on whether energy prices are transmitting into core goods and services prices.

The market is especially focused on the month-on-month core CPI reading. Analysts believe that if core CPI rises 0.2%, it may provide room to keep rates unchanged; if it rises 0.4%, it may significantly push policy toward a rate hike. If the reading is 0.3%, traders may pay further attention to the unrounded data and subcomponents such as housing, services, and core goods.

CME FedWatch data shows that the market currently expects about a 70% probability that the Fed will raise rates by 25 basis points in September, lifting rates to the 3.75% to 4% range. Bank of America believes that even if CPI meets expectations, it may be enough to support a rate hike; Nomura Securities expects the Fed to continue keeping rates unchanged.