US CPI data signals high-price inflation

The US markets are eyeing another hike in the rate by early November. If reports are to be believed, then the Fed has every intention of taking the shot in an attempt to lower inflation. S&P500 and Nasdaq 100 closed their doors on a lower note before receiving an 18-month low figure.

According to the Fed minutes, inflation is unacceptably high, and the rate would not only be hiked but will also be kept at the raised price for longer than expected.

The Dollar’s performance slipped by a huge gap, which was less likely to happen. Leal Brainard, the Vice Chair of the Fed, raised a red flag over the prospect of policy lags and their macro effect on the economy. The rate has been hiked with 75bps three times already. November could come with the fourth one in store.

CPI numbers showcase a relief with a drop to 8.3% from 8.5%. It is the core prices that are bringing blows to everyone. A sharp rise to 6.3% from 5.9% was unexpected even for the Dollar to handle it. This only signals that inflation is likely to rent a place for longer, and keeping rates hiked for a long time is the only possible solution.

However, the Fed could lose that weapon, too, as higher rates may cause damage, especially if the hike is held for a longer duration.

Core prices are estimated to fall in September to 8.1%, with little space for the Fed to catch a break.

There must be a sizable change in the numbers for the Fed to transition the relief to everyone. Energy prices continue to slip back, doing good to consumers but not to businesses that cannot push the price.

The US CPI will be dealt with under the situation. The focus is on core prices, as they are more likely to cause trouble. There is a higher chance that CPI will fall again; therefore, it is on the lower side in priorities.

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The US Dollar appears to bring down the collective value when paired with other currencies. Once a report is published with recent figures, there will be a clearer picture of the future.