US CPI Will Help Determine Size of Next Fed Rate Hike: Eco Week -

(Bloomberg) — US inflation data in the coming week are expected to stay consistent with a gradual step-down in cost pressures, and will help determine the size of the Federal Reserve’s next interest-rate increase.

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The consumer price index excluding food and energy, known as core CPI and seen as a better underlying indicator than the headline measure, is projected to have risen 0.3% in December.

While slightly more than November, the monthly advance would be in line with the average for the quarter, and well below the 0.5% average seen from January through September amid the highest inflation in a generation.

Thursday’s figures will be some of the last such readings policy makers will see before their Jan. 31-Feb. 1 meeting and rate decision, the first with a new rotation of voting members. Economists are penciling in a 25 basis-point increase in the Fed’s benchmark rate, though officials have indicated a half-point hike is possible.

The Labor Department’s CPI is expected to show core inflation increased 5.7% from a year earlier. That would be the highest December-to-December print since 1981. While it’s well above the Fed’s goal, and helps explain policy makers’ intention of keeping rates higher for longer, year-over-year price growth is moderating.

The report will surface nearly a week after the latest US jobs report showed that wage growth, a key factor in the inflation outlook, cooled in December.

Read more: Fed Gets ‘Goldilocks’…

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By Justin

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