July CPI Expectations See Slight Decline, Citi and Bank of America Diverge on September Rate Hike Prospects

Odaily News According to a Reuters survey, economists expect the U.S. overall CPI annual rate for July to ease to 3.4% from 3.5% in June, while core CPI annual rate is expected to edge down to 2.5% from 2.6% last month. Economists at Citigroup believe that, as expected, a second consecutive month of softening inflation readings would mean more than one month of data points to easing inflationary pressures, which would essentially rule out a September rate hike.

However, economists also expect core services inflation to rise slightly in July, with prices edging up 0.3% month-on-month, following a flat reading from May to June. Analysts at Bank of America noted that a rebound in the core services index could keep a September rate hike on the table. Analyst Kate Duguid said that if the latter view prevails and inflation data comes in below expectations, the Fed's rate hike could be delayed to December or later. (Jin Shi)