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Inflation and oil price swings raise uncertainty ahead of next Fed meeting
With the Fed entering its blackout period, the August CPI and PPI releases become the key signals for whether officials consider another rate hike.
Redfin News said uncertainty is unusually high heading into the next Federal Reserve meeting, with the focus on this week’s inflation data. The outlet also pointed to rising oil prices tied to renewed fighting in the Middle East as another factor keeping rates high and volatile.
According to Redfin News, last week’s Fed communication showed mixed signals, with governors Waller and Barr and New York Fed President Williams highlighting improvements in inflation while indicating they would weigh a hike if August CPI is high. That messaging contrasted with the more hawkish tone from Fed Chair Warsh at Jackson Hole, even after the jobs report landed on the hotter side.
Redfin News noted that August jobs growth totaled 162,000, about three times the expected figure, though it framed part of the upside as normalization after large July declines. It said that a healthier labor market lowers the inflation threshold that would prompt a hike, tightening the link between inflation prints and the Fed’s decision.
The outlet added that the week’s calendar is light aside from Thursday and Friday’s PPI and CPI releases, which it said share the same raw inputs as the Fed’s preferred core PCE metric released later in the month. It explained that forecasts for the implied PCE measure of monthly core inflation for August around 0.1%, 0.2%, or 0.3% would likely split the decision, and it cautioned the Fed will not comment before the meeting due to its blackout period.