US August CPI came in as expected on the headline, with year-on-year inflation steady at 3.4% and month-on-month rising to 0.4% from 0.1%. Core inflation eased to 2.4% from 2.5% year-on-year, yet the monthly core rate firmed to 0.3% from 0.2%, versus an implied run-rate of about 0.16% needed to align with a 2% annualised target. Reuters polling of 93 desks shows 65 looking for the Fed to hold and 28 expecting a hike, while OIS implies roughly even odds and futures price almost a full move, at +22 bps, towards a 3.75–4.00% target range.
Upcoming Global Economic Events
Beyond the Fed decision, the week features Canadian CPI at 12:30 pm GMT, followed by UK jobs on Tuesday, UK inflation on Wednesday, a Bank of England decision on Thursday and a Bank of Japan policy call on Friday. For Canada, economists forecast headline CPI holding at 3% year-on-year, with estimates spanning 3% to 3.2%, while the Bank of Canada’s CPI median and trim are seen unchanged at 2% and 1.9%. Market pricing has shifted to 14 bps of tightening for this month’s BoC meeting from 7 bps a week earlier, after comments that multiple increases could be needed; this comes alongside evidence of price pressures concentrated in petrol and energy-linked items, and an August employment fall of a little more than 40,000 versus about +15,000 expected, with wage growth slowing to 2% year-on-year.
