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MNI US CPI Preview: A Key Framing Of Trends With June Cut Seen As A Coin Toss

Consensus puts core CPI inflation at 0.3% M/M in March with a chance of a 'low' 0.3 print, after surprising higher in the first two months of the year

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EXECUTIVE SUMMARY

  • Consensus puts core CPI inflation at 0.3% M/M in March with some skew towards a ‘low’ 0.3 reading.
  • Most of the usual drivers are seen exerting downward pressure after a stronger than expected 0.36% M/M in Feb, most notably used car prices after their surprise increase.
  • OER inflation will again be watched as methodological-related noise remains top of mind, markets will likely be sensitive to supercore inflation after two particularly strong prints, and we watch for latest supply side effects across core goods categories.
  • With the central leadership of the FOMC seemingly looking through near-term "bumps" and eyeing reasons to proceed with rate cuts, a softer-than-expected March core CPI reading (below 0.27% M/M, particularly if it translates cleanly to PCE) would likely re-center implied 2024 cut pricing back toward the March Dot Plot's base case 75bp (from around 63bp at the time of writing) and nudge up June pricing from around 50% currently to 60-65%.

PLEASE FIND THE FULL REPORT HERE:

USCPIPrevApr2024.pdf

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EXECUTIVE SUMMARY

  • Consensus puts core CPI inflation at 0.3% M/M in March with some skew towards a ‘low’ 0.3 reading.
  • Most of the usual drivers are seen exerting downward pressure after a stronger than expected 0.36% M/M in Feb, most notably used car prices after their surprise increase.
  • OER inflation will again be watched as methodological-related noise remains top of mind, markets will likely be sensitive to supercore inflation after two particularly strong prints, and we watch for latest supply side effects across core goods categories.
  • With the central leadership of the FOMC seemingly looking through near-term "bumps" and eyeing reasons to proceed with rate cuts, a softer-than-expected March core CPI reading (below 0.27% M/M, particularly if it translates cleanly to PCE) would likely re-center implied 2024 cut pricing back toward the March Dot Plot's base case 75bp (from around 63bp at the time of writing) and nudge up June pricing from around 50% currently to 60-65%.

PLEASE FIND THE FULL REPORT HERE:

USCPIPrevApr2024.pdf