US August PPI rises 0.4% in line with expectations, market focuses on tomorrow’s CPI data

The U.S. Producer Price Index (PPI) for August was largely in line with analysts’ expectations, rising 0.4% compared to July. Now, market participants will turn their attention to tomorrow’s release of Consumer Price Index (CPI) data. According to CME’s FedWatch tool, the probability of a rate hike at the September FOMC meeting has approached 70%. After the release of the CPI data, economists will begin to forecast the Federal Reserve’s preferred inflation measure—the Personal Consumption Expenditures (PCE) Price Index. If the CPI data released tomorrow comes in lower than expected, it will further support the view of keeping interest rates unchanged. Northlight Asset Management Chief Investment Officer Chris Zaccarelli pointed out: “Although there is a possibility of a rate hike at the October meeting, the chances of the Federal Reserve starting a rate hike cycle are extremely low.”