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:CME) 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.

Source : Investing.com / October 12, 2023