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26 Feb 2015
Negative US CPI will not prevent the first rate hike – BBH
FXStreet (Barcelona) - With Yellen clearly acknowledging the negative impact of energy prices on inflation, soft inflation in the US will not prevent the first rate hike, argues the Research Team at Brown Brothers Harriman as they preview today's US data release.
Key Quotes
“While headline CPI may be negative, the core rate is stickier and is expected to be unchanged at 1.6%."
“Yellen was clear in her testimony. Headline inflation is weighed down by the fall in energy prices, and this is spilling over into the core rate. This seemed to be a clear signal that soft inflation will not prevent the first rate hike.”
“Separately, the US reports durable goods orders and weekly initial jobless claims. Durable goods orders are expected to bounce back after a weak December report. The consensus calls for a 1.6% increase after a 3.4% decline. The internals are also expected to have improved.”
“Weekly jobless claims have been trending lower. As of last week, the four-week moving average stood at 283k, the lowest since last October.”
“Next week's national number are of more significant for investors, but the weekly initial jobless claims have fallen between the January survey week and the February survey week.”
Key Quotes
“While headline CPI may be negative, the core rate is stickier and is expected to be unchanged at 1.6%."
“Yellen was clear in her testimony. Headline inflation is weighed down by the fall in energy prices, and this is spilling over into the core rate. This seemed to be a clear signal that soft inflation will not prevent the first rate hike.”
“Separately, the US reports durable goods orders and weekly initial jobless claims. Durable goods orders are expected to bounce back after a weak December report. The consensus calls for a 1.6% increase after a 3.4% decline. The internals are also expected to have improved.”
“Weekly jobless claims have been trending lower. As of last week, the four-week moving average stood at 283k, the lowest since last October.”
“Next week's national number are of more significant for investors, but the weekly initial jobless claims have fallen between the January survey week and the February survey week.”