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BofA, CIBC Throw In Towel On Dec FOMC Hike Post-CPI

FED
In the wake of today's softer-than-expected CPI report, BofA and CIBC have changed their minds on the Fed delivering a final hike in December, and now see no further increases.
  • BofA: "We have been arguing that recent Fed speakers were leaning toward a pause in December but were looking for the data to support their view. Today's benign CPI report suggests that the upside surprise in September was a blip. The Fed should be encouraged by the details of today's print, specifically the drop in OER inflation and the significant cooldown in core services excluding housing. Therefore, we have changed our Fed call. We now think that the hiking cycle is over." Their forecast for the cutting cycle remains unchanged, with reductions starting in Jun 2024 with at a 1 cut per quarter pace.
  • CIBC: "Despite still elevated non-housing services, the Fed will likely be pleased with this additional bit of progress as core inflation has remained steady in a range close to target since June. As a result, we are removing our call for the Fed to hike in December. While there remains a risk the Fed could reassess its stance in early 2024, today's data, combined with evidence of a softening labour market and most importantly, the change in tone of the FOMC to show greater patience suggests December is likely off the table."
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