Market Focus Shifts To August CPI Inflation Data

According to BlockBeats, the market's attention this week is on the upcoming inflation data, with the August CPI inflation report set to be released at 8:30 PM UTC+8 on Wednesday. Economists predict that the overall CPI for August in the United States will slow to 2.6% year-on-year from 2.9% in July. Several economists suggest that falling natural gas prices and stable food prices may help control overall inflation. If these predictions hold true, the year-on-year CPI inflation will reach its lowest level since March 2021. The core CPI inflation, which excludes food and energy prices, is expected to drop to 3.2% year-on-year. These forecasts align with the estimates from the Cleveland Federal Reserve's Nowcast model. According to CME's 'FedWatch,' there is a 70% probability that the Federal Reserve will cut interest rates by 25 basis points in September, and a 30% probability of a 50 basis point cut. If inflation unexpectedly declines, the expectation for a 50 basis point rate cut is likely to increase further. On the other hand, if the report meets expectations or shows a slight increase in inflationary pressure, it may not change the market's anticipation of the Fed's rate adjustment but could somewhat temper the subsequent dovish rhetoric.