CPI data outlook: Economists expect the U.S. unadjusted CPI annual rate to fall to 2.6% in August, the lowest level since March 2021

The market's focus this week turned to inflation data, with the August CPI inflation report to be released at 8:30 p.m. Beijing time on Wednesday. Economists expect the U.S. headline CPI to slow to 2.6% year-on-year in August from 2.9% in July. Several economists said that falling gas prices and stable food prices could help control overall inflation. If the forecast holds true, CPI inflation will hit a new low since March 2021. Core CPI inflation, which excludes food and energy prices, is expected to fall to 3.2% year-on-year. These forecasts are consistent with estimates from the Cleveland Fed's Nowcast model. According to CME Fed Watch, the probability of a 25 basis point rate cut by the Federal Reserve in September is 70%, and the probability of a 50 basis point rate cut is 30%. If inflation unexpectedly declines, expectations of a 50 basis point rate cut are likely to rise further. On the other hand, if the report results meet expectations and even show a slight increase in inflationary pressures, although it will not change the market's expectations for the Fed's interest rate adjustment this time, it may to some extent curb the subsequent dovish remarks. (Jinshi)