CPI data outlook: Economists expect the U.S. unquarterly CPI annual rate to fall to 2.6% in August, the lowest level since March 2021

On September 11 news, the focus of the market turned to inflation data this week. The CPI inflation report for August will be released at 8:30 pm Beijing time on Wednesday. Economists expect that the overall CPI in the United States will slow to 2.6% year-on-year in August from 2.9% in July. Several economists said that lower natural gas prices and stable food prices could help control headline inflation. If the forecast holds, CPI inflation will hit a new low year-on-year since March 2021. Core CPI inflation, which excludes food and energy prices, is expected to fall to 3.2% year-on-year. These forecasts are in line with estimates from the Cleveland Fed's Nowcast model.
According to CME "Fed Watch", the probability of the Fed cutting interest rates by 25 basis points in September is 70%, and the probability of cutting interest rates by 50 basis points is 30%. If there is an unexpected decline in inflation, the expectation of a 50 basis point rate cut is likely to rise further. On the other hand, if the report results are in line with expectations, or even show a slight increase in inflationary pressures, although it will not change the market's expectations for the Fed's interest rate adjustment, it may to some extent curb the dovish rhetoric that follows.