U.S. September Overall Inflation May Hit Largest Increase in 5 Months, October Rate Hike Expectations Face Test

BlockBeats news, October 14 — The latest market expectations show that the U.S. September headline CPI is expected to rise 0.6% month-over-month, up from 0.4% in August, potentially marking the largest increase in five months; the year-over-year gain is expected to rise from 3.4% to 3.6%. Influenced by the Middle East situation and oil prices, rising energy prices may become the main driver of accelerating inflation.

On core CPI, the market expects a 0.2% month-over-month increase and a 2.5% year-over-year increase, with the monthly gain potentially slowing from the previous reading. Goldman Sachs expects September energy prices to rise about 5% month-over-month, while housing inflation continues to cool. The divergence between headline and core inflation trends may increase the difficulty of the Fed's policy judgment.

Fed officials remain divided on the next move. Cleveland Fed President Hammack believes inflationary pressures are spreading to more areas and is open to whether to hike rates at the end of October; Governor Waller said there is no need to raise rates at two consecutive meetings. The market will focus on whether this data release will change judgments about the rate path for October and December.

U.S. September CPI will be released tonight at 20:30, September PPI will be released on Thursday, and Fed Chairman Warsh is expected to speak on Friday. If CPI comes in above expectations, it may reinforce expectations for further policy tightening; if core inflation slows, it may support the Fed in pausing rate hikes.