Major Wall Street firms have issued their forecasts ahead of the U.S. Bureau of Labor Statistics' release of the August CPI inflation report on September 11. JPMorgan, Goldman Sachs, Barclays, Morgan Stanley, Wells Fargo, and other major banks estimate a median headline CPI inflation reading of 3.4%, consistent with July's level. Moody's and Nomura expect a slightly lower reading of 3.3%.
Economists broadly expect month-over-month inflation to rise to 0.4% in August, up from 0.1% in July, while core CPI (excluding food and energy) is projected at 0.2% month-over-month, with the annual core rate expected to decline to 2.4% from 2.5%.
The CPI data carries significant weight for monetary policy. According to Goldman Sachs' Brian Bingham, the Federal Reserve is heavily focused on this inflation print ahead of next week's FOMC meeting. The CME FedWatch Tool currently shows a 69% probability of a 25 basis point rate hike in September, following a hotter-than-expected August PPI inflation reading of 5.4%. JPMorgan expects the Fed's first 25 basis point rate cut to occur in December, bringing the policy rate to 3.75-4.0%.
The crypto market has experienced volatility in anticipation of the release. Bitcoin dropped nearly 2% to below $77,000 ahead of the CPI announcement, though it has since recovered to trade near $77,210. Trading volume has declined more than 11% over the past 24 hours, suggesting cautious market positioning.
Oil prices have added another layer of uncertainty, falling more than 1.50% to near $101 per barrel after earlier gains driven by tensions between the U.S. and Iran.
