Bloomberg News reports that the Federal Reserve officials planning to halt their tightening campaign this week will receive support from the CPI or the consumer price index data. Bloomberg Economics revealed that it is expected to release on Tuesday.
What has led to the scenario?
Plunging energy prices in May is to offset the surge in the different categories so that the headline index remains unchanged. Anna Wong, the chief US economist of Bloomberg, revealed that as stated in a note on Monday in a preview report. Leaving aside food and energy, the prices may have surged by 0.3%. This is a deceleration from the 0.4% increase of April, stated Anna Wong.
What might be the consequences of this scenario?
If there are monthly increases, it would eventually lead to moderation in year-on-year rates of inflation for the headline as well as “core” indexes. And the surges are adequate for the US central bank’s Federal Open Market Committee to go ahead with the 11th straight increase in the benchmark interest rate when the two-day policy meeting ends on Wednesday.
Anna Wong also stated that the rapid decline in year-on-year CPI readings might serve as fodder for FOMC officials and analysts who want the Federal Reserve to stop the hiking cycle. Wong went on to say that excluding a few positive surprises in the May CPI report, it is likely that the FOMC will put on hold the policy rate when the meeting is held in June.
What do Bloomberg Economics Projections say?
Bloomberg Economics Projections are below the consensus estimates in a Bloomberg Survey of the outside individuals or the forecasters. These outside forecasters expect headline CPI to rise by 0.1% and the core CPI by 0.4%.
Bloomberg News reports that for the price pressures in the US, there is more agreement on the broad path forward. And many anticipate that the moderation in the inflation rates will likely pick up momentum going forward.
In a note, the economists at Goldman Sachs Group Inc wrote on Monday that they anticipate month-over-month core CPI inflation to move downward in the forthcoming months just as the cost of used cars resumes its drop and rental inflation slows down.
According to Spencer Hill and Manuel Abecasis, associated with Goldman Sachs Group Inc, they anticipate month-over-month core CPI inflation to drop 0.25% to 0.30% towards the latter half of 2023, as they mentioned in a report. They also said that they predict the year-over-year core CPI inflation to be 4.2% in December 2023, and for December 2024, it is 2.8%.
