U.S. inflation data next week may harden U.S. Federal Reserve policymakers’ resolve to push for another big rate hike later this month, Bloomberg reports.
The closely watched consumer price index likely rose nearly 9% in June from a year earlier, a new four-decade high, based on the average forecast of economists in a Bloomberg survey. Compared to May, the CPI is expected to increase by 1.1%, marking the third month in four months with at least a 1% increase.
While persistently high and broad-based inflation is seen as persuading Fed officials to raise their benchmark interest rate by 75 basis points for a second straight meeting on July 27, recession worries are growing. There are signs, however, that price pressures at the producer level are stabilizing as commodity costs — including energy — fall.
Even so, inflation data is likely to attract increased scrutiny globally after a faster-than-opinion result for May wreaked havoc on financial markets.
The U.S. inflation data followed Friday’s data showing stronger-than-expected employment growth and an unemployment rate near a five-decade low, underscoring a tight labor market that is helping to keep wage growth high.
Next week also sees the release of data on producer prices, industrial production and consumer sentiment, as well as the Fed’s Beige Book. Fed regional presidents Thomas Barkin and Raphael Bostic will discuss the economy and monetary policy in separate engagements.
Source: Capital
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