(October 19) – Although the U.S.
Consumer Price Index came in on
target with analyst expectations
it still reveals building
inflation in the U.S. economy and
shouldn’t soothe the U.S. Federal
Reserve Board’s tightening
tendencies, says Nesbitt Burns
chief economist, Sherry Cooper.
The U.S. CPI up 0.4% on the
headline and 0.3% at the core was
driven by increased cigarette and
gas prices, clothing prices were
also up strongly. Cooper says
these results do not demonstrate
rapid inflation, but they do reveal
some continuing price buildup,
even if core inflation is running
at about a 2.5% annual pace. This
report will not cooling the Fed
when it comes to hike interest
rates, she contends.
Economists at CIBC World
Markets are a little more
encouraged by today’s CPI report.
They expect the 2.5% annual pace
to continue into next summer.
CIBC is not prepared to make a
call on the Fed’s next move. “As
this year has shown, it’s a
dangerous game to predict Fed
policy from current CPI readings,
with the Fed already having
tightened twice despite core
prices at a generational low.”
-IE Staff
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