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Jan 14 - 12:55 PM

Morgan Stanley: What We Expect from the US December CPI Report

By eFXdata  —  Jan 14 - 12:00 PM

Synopsis:

Morgan Stanley forecasts headline CPI for December to rise by 0.37%M, driven by energy prices, while core CPI is expected to slow to 0.26%M, reflecting easing pressures in core goods and stable rents.

Key Points:

  1. Headline CPI:

    • Energy prices likely contributed significantly to the expected 0.37%M increase.
  2. Core CPI:

    • Core CPI is forecast to increase by 0.26%M, slowing from recent monthly trends.
    • Core goods inflation moderates, with less hurricane-driven car price pressure.
  3. Rent and Housing Trends:

    • Owners' equivalent rent and tenant rents expected to accelerate but remain below the past year’s pace.
    • The final core CPI figure (0.26%M) rounds to 0.3%M but is on the edge of rounding to 0.2%M, with downside risks if rents or car insurance prices underperform expectations.

Conclusion:

Morgan Stanley expects slower core inflation for December, with risks leaning toward a softer core CPI print if certain components like rents or car insurance weaken further.

Source:
Morgan Stanley Research/Market Commentary

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