Data from the US released on Wednesday showed a decline in the annual Consumer Price Index in April in line with expectations. Analysts at TD Securities point out that April core CPI still suggests underlying inflation is likely to remain sticky ahead of the June FOMC meeting; they are of the view that a final 25bp rate increase to 5.25%-5.50% remains on the table.
On Wednesday, data from the United States revealed a decline in the annual Consumer Price Index (CPI) for April, in line with expectations. TD Securities analysts noted that the core CPI data for April indicates that underlying inflation will likely remain persistent ahead of the June Federal Open Market Committee (FOMC) meeting. They expressed the possibility of a final 25 basis point rate increase to 5.25%-5.50%.
The key quotes from the report are as follows:
“Consumer price inflation matched consensus expectations in April, with headline CPI rebounding 0.4% m/m. Prices in the core segment remained firm, also advancing at a solid 0.4% m/m pace for a second consecutive month. In our view, the path for core inflation over the next few months will continue to be determined by the tug-of-war between the newfound momentum in goods prices and slowing services inflation.”
Furthermore, the report stated:
“With April core CPI prices still suggesting underlying inflation is likely to remain sticky as we head into the June FOMC meeting, we are of the view that a final 25bp rate increase to 5.25%-5.50% remains on the table. However, we also acknowledge that the FOMC’s decision has become especially data-dependent, with activity/banking related data gaining more prominence on the Fed’s dashboard post-SVB.”
In summary, data from the US on Wednesday indicated that the annual Consumer Price Index (CPI) for April declined in accordance with expectations. Analysts at TD Securities pointed out that April’s core CPI still implies that underlying inflation is likely to persist ahead of the June FOMC meeting. They also believe that a final 25-basis-point rate increase to 5.25%-5.50% remains possible. The report noted that consumer price inflation met consensus expectations in April, with headline CPI rebounding by 0.4% month-on-month. Prices in the core segment also remained strong, advancing at a 0.4% month-on-month rate for a second consecutive month. TD Securities analysts expressed their belief that the tug-of-war between the newfound momentum in goods prices and the slowing of services inflation will determine the path for core inflation over the next few months.
Moreover, the report revealed that as April’s core CPI prices continue to suggest that underlying inflation is likely to remain persistent leading up to the June FOMC meeting, analysts are of the view that a final 25 basis-point rate increase to 5.25%-5.50% remains on the table. However, the report also acknowledges that the FOMC’s decision has become particularly data-dependent, with activity/banking related data gaining more prominence on the Fed’s dashboard post-SVB.
Therefore, data from the United States on Wednesday displayed a decline in the annual Consumer Price Index (CPI) for April, in line with expectations. TD Securities analysts noted that the core CPI data for April indicates that underlying inflation will likely continue to persist ahead of the June FOMC meeting. They expressed the possibility of a final 25 basis point rate increase to 5.25%-5.50%. The report pointed out that consumer price inflation matched consensus expectations in April, with headline CPI rebounding by 0.4% month-on-month. Prices in the core segment also stayed firm, advancing at a solid 0.4% month-on-month rate for the second consecutive month. In the analysts’ view, core inflation’s path over the next few months will be determined by the tug-of-war between the newfound momentum in goods prices and the slowing of services inflation.
The report also stated: “With April core CPI prices still suggesting underlying inflation is likely to remain sticky as we head into the June FOMC meeting, we are of the view that a final 25 basis-point rate increase to 5.25%-5.50% remains on the table. However, we also acknowledge that the FOMC’s decision has become especially data-dependent, with activity/banking related data gaining more prominence on the Fed’s dashboard post-SVB.”
