US CPI Inflation Report Draws Analysts’ Attention

March 12, 2024 23:14

The US CPI inflation report will be the focus of attention for investors and traders as it is expected to provide some clarity on how consumer prices fluctuated in February. Some economists suggest that the Federal Reserve could cut interest rates during summer, but Fed’s policymakers have stressed that CPI data, as well as other reports, such as payrolls etc., should give strong signals that the economy does slow down before any monetary policy easing takes place.

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US CPI February 2024

The US CPI inflation data is due to be released later today by the Bureau of Labour Statistics (BLS). Economists forecast headline inflation to remain unchanged at 3.1%, on an annualised basis, while monthly inflation could come in at 0.4%, slightly higher than January’s reading. Core inflation is expected to decrease to 3.7% on a yearly basis.

As some analysts suggest, the CPI inflation report could alter the market’s forecast regarding the Federal Reserve (Fed) policy pivot. The Fed’s head, Jerome Powell, said last week that the central bank’s board should be confident that inflation moves towards the 2% target in a sustainable way before starting to reduce borrowing costs.

UK GDP January 2024

On Wednesday, the Office for National Statistics (ONS) will publish GDP data for the month of January. Market analysts predict that the monthly GDP growth rate will likely return to positive territory, coming in at 0.2%. In December, a similar report revealed that the UK economy had shrunk by 0.1% on a month-to-month basis.

The UK economy fell into a technical recession in the fourth quarter of 2023. Market analysts suggest that the Bank of England (BoE) could start considering relaxing its rate policy, especially if the January report doesn’t come in line with expectations. At this stage, economists forecast that the first BoE rate reduction could take place in August.

UK Unemployment Rate And Average Earnings Reports

According to the ONS, the UK’s unemployment rate rose to 3.9%  in the three months to January, surpassing analysts’ expectations. Another report showed total earnings grew by 5.6% between November and January, down from 5.8% in the previous three months.

Speaking to TheGuardian, economists suggested that although the earnings growth rate fell, it is still too high for the BoE to begin discussing interest rate cuts.

Reuters Poll Shows Fed Rate Cut Likely In June

The latest poll published by Reuters showed that the majority of economists believe that the Federal Reserve could move forward with a rate cut in June. 72 out of 108 professional economists forecast the first cut in the first summer month.

Regarding rate cuts, half the economists see a total of 75 basis points (bps) reduction in 2024 while 26 out of 108 predicted 100 bps cuts.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.