The Federal Reserve is set to release its preferred inflation data for August, which could impact the Fed’s rate hike cycle and risk assets. If the data is higher than expected, it may suggest that the rate hike cycle is not yet over, potentially posing a challenge for risk assets. Conversely, if the data is lower than anticipated, it may indicate that the rate hike cycle is nearing its end.
The consensus forecast for Core PCE Price indexes in August is 3.9% year-on-year and 0.2% month-on-month. However, outcomes that deviate from the consensus are more likely to generate movement in the market. Particularly, results that fall below the minimum or exceed the maximum range are expected to have a greater impact.
Overall, the upcoming inflation data release has the potential to influence the trajectory of the Federal Reserve’s rate hike cycle and the performance of risk assets.