Global investors will keep an eye on the US inflation data for August, as these data may determine whether the Federal Reserve will raise interest rates in late September. However, major Wall Street institutions are clearly divided in their interpretation of this report: Bank of America Securities believes that the data will be strong enough to support the implementation of the September rate hike; Citi expects core inflation to cool down further, and the Federal Reserve is more likely to stand still. According to Chase Trading Desk, Bank of America Securities predicts that the US core CPI will rise 0.22% month-on-month in August, corresponding to the core PCE of about 0.24%, and the annual rate will rise to 3.4%. It believes that this level is enough to convince Federal Reserve Chairman Walsh that inflation has not been fully controlled, thus supporting another rate hike. However, Citi predicts that the US core CPI will only increase by 0.184% month-on-month and fall to 2.3% per annum in August — if true, it will be the lowest annual rate reading since the core CPI broke through 2% in April 2021, which is enough for most officials to choose to keep interest rates unchanged. Citi pointed out that the PCE data for August is more uncertain than normal — the Federal Reserve made methodological adjustments to some key segments, which means that the regular mapping of CPI and PPI data to PCE became unclear this month. At the same time, historical PCE data for the past five years will also face revisions, which is expected to lower the core PCE annual rate by more than 30 basis points to around 3.0%. This technical factor makes the final PCE reading more difficult for the market to interpret.

Global investors will keep an eye on the US inflation data for August, as these data may determine whether the Federal Reserve will raise interest rates in late September. However, major Wall Street institutions are clearly divided in their interpretation of this report: Bank of America Securities believes that the data will be strong enough to support the implementation of the September rate hike; Citi expects core inflation to cool down further, and the Federal Reserve is more likely to stand still. According to Chase Trading Desk, Bank of America Securities predicts that the US core CPI will rise 0.22% month-on-month in August, corresponding to the core PCE of about 0.24%, and the annual rate will rise to 3.4%. It believes that this level is enough to convince Federal Reserve Chairman Walsh that inflation has not been fully controlled, thus supporting another rate hike. However, Citi predicts that the US core CPI will only increase by 0.184% month-on-month and fall to 2.3% per annum in August — if true, it will be the lowest annual rate reading since the core CPI broke through 2% in April 2021, which is enough for most officials to choose to keep interest rates unchanged. Citi pointed out that the PCE data for August is more uncertain than normal — the Federal Reserve made methodological adjustments to some key segments, which means that the regular mapping of CPI and PPI data to PCE became unclear this month. At the same time, historical PCE data for the past five years will also face revisions, which is expected to lower the core PCE annual rate by more than 30 basis points to around 3.0%. This technical factor makes the final PCE reading more difficult for the market to interpret.