Bankinter | The overall and core CPI in the US surprised on the upside in September. The overall CPI rose by one tenth of a percentage point to 3.0% annually, less than expected (3.1% year-on-year). In month-on-month terms, it rose 0.3% monthly against 0.4% expected and previously. The core rate improved, falling by one tenth of a percentage point to 3.0% year-on-year (against 3.1% expected and previously). In month-on-month terms, it rose 0.2% monthly against 0.3% expected and previously. By component, the biggest rebound came from petrol (4.1% month-on-month) and total energy 1.5% month-on-month. In contrast, there was greater restraint in second-hand vehicles down 0.4% month-on-month.
Analysis team’s view: Positive reading of inflation, although it is true that the data most closely followed by the Fed is the PCE Deflator. The US government shutdown (since 1 October) reduces the references for the next meeting (28-29 October).
In any case, the trend towards moderation in underlying inflationary pressures and the dovish/soft tone of Powell’s latest message on 14 October reinforce our central scenario that the Fed will lower rates again by 25bp to 3.75%/4.00%.
