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Barclays: Very Significant CPI Beat Needed For 75bp In Dec

US OUTLOOK/OPINION
  • Barclays forecast core CPI of 0.4% M/M (consensus 0.4) in early signs of sustained deceleration after September's 0.6% M/M, with the year-ago rate easing from 6.6% to 6.4% Y/Y.
  • It will reflect persistent downward pressures on medical services prices and deflationary pressures on core goods, as used car prices continue gradually to unwind their pandemic-related run-up.
  • Even so, they expect another month of robust increases in rents, keeping the level of inflation uncomfortably high for the FOMC.
  • However, "after Wednesday’s carefully crafted Fed message, CPI would have to very significantly surprise on the upside, e.g., a further M/M acceleration of core CPI, for the Fed to implement another 75bp hike in December".
  • They see headline inflation accelerating from 0.4% to 0.5% M/M (8.2 to 7.8% y/y), reflecting the recent upturn in oil prices.
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  • Barclays forecast core CPI of 0.4% M/M (consensus 0.4) in early signs of sustained deceleration after September's 0.6% M/M, with the year-ago rate easing from 6.6% to 6.4% Y/Y.
  • It will reflect persistent downward pressures on medical services prices and deflationary pressures on core goods, as used car prices continue gradually to unwind their pandemic-related run-up.
  • Even so, they expect another month of robust increases in rents, keeping the level of inflation uncomfortably high for the FOMC.
  • However, "after Wednesday’s carefully crafted Fed message, CPI would have to very significantly surprise on the upside, e.g., a further M/M acceleration of core CPI, for the Fed to implement another 75bp hike in December".
  • They see headline inflation accelerating from 0.4% to 0.5% M/M (8.2 to 7.8% y/y), reflecting the recent upturn in oil prices.