CIBC Research discusses its reaction to today's US CPI report for the month of December.
"US inflation fell alongside lower gasoline prices in December. The 1.9% y/y gain in headline prices was in line with both our forecast and the consensus, and the deceleration from 2.2% in the previous month was driven entirely by energy prices. Core price pressures rose 0.2% m/m to leave core inflation unchanged at 2.2% y/y, with services behind most of that advance," CIBC notes.
"That implies that the Fed's preferred core inflation metric, core PCE prices will remain just below target in December. With little indication here that the acceleration in wage pressures or tariffs are causing any pickup in inflation, the Fed can take a pause in Q1 on raising rates to assess the health of growth indicators.
As such, we continue to expect only one hike in 2019, materializing in Q2," CIBC argues.