Fed Pressured: Will CPI Data Fuels Calls for Rate Cuts？

Tuesday, 13 August 2024, 16:00 – US PPI (MoM) (Jul)

The U.S Producer Price Index (PPI) for June showed a month-over-month increase of 0.2%, which was slightly above market expectations of 0.1%. This increase followed a flat reading in May and a decline of 0.2% in April, highlighting some volatility in producer prices over the past few months. The latest data indicates that while there are upward pressures on producer prices, especially in services and construction, other areas like goods (particularly energy) have seen declines, which has moderated the overall increase. Following current economic conditions, the upcoming PPI is expected to remain stable or display a modest increase.

Wednesday, 14 August 2024, 04:00 – RBNZ Interest Rate Decision

The Reserve Bank of New Zealand (RBNZ) kept its Official Cash Rate (OCR) unchanged at 5.50% during its last meeting on July 2024, which was consistent with market expectations. This marked the eighth consecutive meeting where the rate remained stable. The decision to maintain the rate reflects the RBNZ’s focus on combating inflation, which has shown signs of easing. Recent data suggests that inflation expectations in New Zealand are converging towards the RBNZ’s target of 2%, which is encouraging for the central bank as it seeks to balance the need for economic stability with inflation control. As RBNZ indicated that it is not in hurry to reduce rates until inflation is under control, the RBNZ is likely to keep its rate steady in the upcoming meeting.

Wednesday, 14 August 2024, 14:30 – US CPI (YoY) (Jul)

As of June 2024, the U.S. Consumer Price Index (CPI) showed a modest increase of 3.0% year-over-year, weaker than market expectation and previous reading of 3.1% and 3.3% respectively. This marks a continued trend of inflation moderating from its peak in 2022. The primary contributors to the recent inflation trends include persistent but slowing price increases in the shelter and motor vehicle insurance categories. Meanwhile, the index for used cars and trucks fell sharply, which contributed to the overall moderation in inflation. Market expecting that upcoming data release will reflect that the inflation will continue to moderate gradually.

Thursday, 15 August 2024, 14:30 – US Retail Sales (MoM) (Jul)

The U.S Retail Sales for June 2024 showed a month-on-month growth of 0.0%, which was lower than the previous month’s 0.3% increase. The main factors contributing to the stagnation in June included declines in sales at gasoline stations and motor vehicle dealers, offset by growth in nonstore retail and building materials sectors. The weak performance in June was partially due to cautious consumer spending amid economic uncertainty and high inflation, which has kept retail growth subdued. The upcoming release is expected to display little to no growth given that the inflationary pressures still present.