Inflation is still hot but is expected to have moderated in August as gas prices dropped, supply chains improved and the cost of travel fell.
How This 30-Year-Old Content Strategist Bought Her $620,000 NYC Apartment: ‘I Feel Proud Because I Did It Myself'Gasoline prices are the biggest driver of the decline in energy. Since peaking at $5.01 in mid-June, the national average for unleaded gas has dropped all summer, to an average of $3.71 per gallon Monday,Markowska expects headline CPI to decline by 0.2%, but sees a rise in core of 0.3%. Shelter is one area expected to rise, while used car prices are forecast to fall.
Economists say the base effects of comparing the number to last year are behind the jump in August core inflation. Strategists say the Fed's Sept. 21 rate decision may be affected by the August CPI report, but the details inside that report may be more important for what they say about the longer-term outlook. That could help shape the expectations for the Fed's end or terminal rate when it stops hiking.Market expectation for the Fed's terminal rate have been inching higher, and in the futures market, the view is it will reach 4% by early next year. Markowska expects it could reach 4% to 4.
"This gets them into tight policy. Then it's a question of how tight do they want to go," Swonk said.
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