This global economic barometer has once again set the world's nerves on edge. The release of the September CPI data is like a pebble thrown into a tranquil lake, causing ripples to spread out in layers. It seems that the pace of inflation in the United States has slowed down, but the gap between market expectations has sparked new waves. People can't help but ask: the Federal Reserve, which steers the giant ship of global monetary policy, will it adjust its course in November and cut interest rates again?
What catches the eye is the overall CPI data, which rose by 2.4% year-on-year, compared to the previous value of a 2.5% increase, seemingly showing a cooling trend. However, compared to the market expectation of 2.3%, it appears somewhat "hot to the touch." The decline in energy prices has become the main driving force behind the retreat of CPI, but whether this means that inflation has truly been brought under control still needs to be questioned.
What is even more concerning is the core CPI, which, after excluding the more volatile food and energy prices, rose by 3.3% year-on-year, also higher than the expected 3.2%. This data reveals that underlying inflationary pressures still exist, and not all goods and services prices have retreated. It is worth noting that the service prices, referred to as the "super core CPI," rose by 4.6% year-on-year, further intensifying people's concerns about inflation.
Advertisement
Faced with these data, how will the Federal Reserve make its decision? As we all know, the Federal Reserve bears the dual mission of promoting employment and stabilizing prices. The current level of inflation is still some distance from the 2% target, making the Federal Reserve's position more delicate.
After the data was announced, the market reacted quickly. U.S. stock index futures fell in response, U.S. Treasury yields also declined, and the dollar remained calm. Investor sentiment became more cautious, and expectations for future economic trends became even more uncertain.
Traders have adjusted their bets, believing that the probability of the Federal Reserve cutting interest rates by 25 basis points in November has increased. This change reflects the market's complex judgment on economic growth and inflation prospects. The CPI data being higher than expected suggests that inflationary pressures still exist. On the other hand, the weakness in the labor market has also triggered concerns about an economic recession.
Some analysts believe that it is unlikely for the Federal Reserve to cut interest rates by 50 basis points in November, and it is more likely to adopt a gradual interest rate reduction strategy to avoid causing too much shock to the economy. The current economic situation is complex and changeable, requiring careful action to avoid policy mistakes.
Other analysts believe that although the September CPI data is higher than expected, it is unlikely to change the Federal Reserve's policy path. The Federal Reserve will continue to cut interest rates by 25 basis points at each of its future meetings until the federal funds rate returns to a neutral level.
There is also disagreement within the Federal Reserve about future policy directions. Some officials believe that the current level of inflation has already been controlled and will continue to retreat in the future, so there is no need to rush to cut interest rates. Other officials believe that inflationary pressures still exist and that further interest rate cuts are needed to stimulate economic growth.Facing a variety of different voices, what choice will the Federal Reserve ultimately make? Perhaps, the answer can only be revealed at the November interest rate meeting. Regardless of the decision the Federal Reserve makes, it will have a profound impact on the global economy.
For investors, closely monitoring the policy trends of the Federal Reserve is crucial. Only in the current market environment full of uncertainty can they navigate steadily through the turbulent market.
Looking back at the entire event, we can clearly see that the release of the U.S. CPI data in September, like opening a window to observe the current state of the U.S. economy, also provides us with a new perspective to understand the Federal Reserve's policy thinking. Where will the U.S. economy go? How will the Federal Reserve choose? Let's wait and see.
Let's focus on the data itself again. The overall CPI increase of 2.4%, although slightly lower than before, is still higher than market expectations. This indicates that the "stubbornness" of inflation should not be underestimated. What is more worth noting is the core CPI, which, after excluding the more volatile food and energy prices, increased by 3.3% year-on-year, also exceeding expectations. This data reveals that under the seemingly calm economic surface, the underlying inflationary pressure is still brewing.
Faced with such data, how will all parties in the market interpret it? Investors have begun to worry whether the Federal Reserve will slow down the pace of interest rate cuts or even turn to raising interest rates? Analysts are divided, with some believing that the Federal Reserve will stay put, while others predict that it will continue to cut interest rates, but the magnitude may be adjusted.
Within the Federal Reserve, there are also different voices. Some officials advocate for a wait-and-see approach, believing that the current level of inflation is still within a controllable range, and cutting interest rates too early may bring new risks. Other officials are more concerned about the weak economic growth trend and advocate for continued interest rate cuts to stimulate economic vitality.
Chicago Fed President Goolsbee said after the data release that the latest inflation data is basically in line with expectations. The overall trend shows that the inflation level is declining. The Federal Reserve needs to focus on its dual mission of promoting employment and stabilizing prices, implying that the current policy focus may be more inclined to support economic growth.
Richmond Fed President Barkin is relatively cautious. Although the inflation rate is heading in the right direction, it is too early to declare victory in the fight against inflation. The Federal Reserve needs to remain vigilant and continue to focus on the long-term trend of inflation.
Atlanta Fed President Bostic is open to future interest rate cuts and will decide whether to adjust monetary policy based on the latest economic data. This also reflects that the Federal Reserve has not yet formed a completely unified opinion on future policy direction.Facing such a complex situation, how should investors respond? They must remain calm and not be swayed by short-term market fluctuations. It is crucial to closely monitor the policy动向 of the Federal Reserve and the trends in various economic data changes. Investors should develop a reasonable investment strategy based on their own risk tolerance and avoid blindly following trends.
The release of the U.S. CPI data for September provides us with a new window to observe the U.S. economy and the direction of Federal Reserve policy. How will the Federal Reserve make its choices, and where will the U.S. economy head? Let's wait and see.