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Aug 10 - 09:55 AM

CIBC: U.S. July CPI Print Puts Our September Fed Rate Hike Call at Risk

By eFXdata  —  Aug 10 - 08:50 AM

Canadian Imperial Bank of Commerce (CIBC) analyzes the latest U.S. Consumer Price Index (CPI) report, emphasizing that the no-surprise print could place their earlier call for a Fed rate hike in September at risk. The recent data suggests that disinflationary forces are solidifying, and the current monetary policy tightening appears to be effective.

Key Data:

  • Core Inflation: Core inflation came in at 0.2% month-over-month (m/m) for the second consecutive month, and on a year-over-year (y/y) basis, it edged down to 4.7%.
  • Headline Inflation: Headline inflation matched the core's m/m move but increased y/y to 3.2% from 3.0%, affected by less favorable base effects.
  • Non-Housing Services: The Fed's preferred measure of prices related to underlying demand, non-housing services, remained subdued at 0.2%, following a flat reading in June.

Key Points:

  • Signs of Disinflation: The July CPI print continues to show evidence of disinflationary trends, indicating that monetary policy measures are having the intended impact.
  • September Rate Hike at Risk: The recent data puts CIBC's call for a Fed rate hike in September at risk. However, a hike could still be on the table if upcoming data indicate economic strength.
  • Welcome News for Powell: Federal Reserve Chair Jerome Powell would likely view two consecutive good inflation readings as positive news, albeit not yet a trend.


The latest U.S. CPI report presents a picture of stability and control over inflation, as both core and headline measures align with expectations. This development potentially places CIBC's prediction of a September rate hike by the Federal Reserve at risk, although forthcoming economic indicators could still lead to a tightening move. Market participants and policymakers will be carefully assessing future data releases to gauge the appropriate monetary policy response in the context of evolving economic conditions.

CIBC Research/Market Commentary


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