July CPI Expected to Tick Slightly Lower, Citi and BofA Differ on September Rate Hike Outlook

August 9th. According to a Reuters survey, economists expect the overall CPI in the United States for July to decrease from 3.5% in June to 3.4%; the core CPI rate is expected to drop from last month's 2.6% to 2.5%. Economists at Citigroup believe that as expected, if there is a second consecutive month of soft inflation readings, it would indicate more than a one-month data point to a cooling of inflationary pressures, essentially ruling out the possibility of a rate hike in September. However, economists also anticipate a slight increase in July's core services inflation, with prices rising 0.3% month-over-month.

Previously, this data remained flat from May to June. Analysts at Bank of America stated that the rebound in core services indicators may still keep a rate hike in September on the table. Analyst Kate Duguid said that if the latter view gains traction and inflation data comes in below expectations, then a Fed rate hike may be postponed to December or later. (FXstreet)