Tonight the CPI will be revealed, will the Federal Reserve's interest rate cut path change as a result?

At 21:30 Beijing time tonight, the U.S. Bureau of Labor Statistics will announce the November CPI data, which is the last important economic indicator before the Federal Reserve's December meeting. The market expects:

The year-on-year growth rate of CPI will slightly rise from 2.6% to 2.7%, and the month-on-month growth rate may also slightly increase to 0.3%.

Core CPI (excluding food and energy) year-on-year growth rate may remain at 3.3%, with month-on-month unchanged at 0.3%.

The probability of an interest rate cut is as high as 86%:

The market generally believes that the Federal Reserve will cut rates by 25 basis points at next week's meeting. According to the CME FedWatch tool, traders' bets on a rate cut in December have reached 86%. Particularly last Friday, several Federal Reserve officials released “dovish” signals, emphasizing that the upcoming monetary policy will be more cautious.

Can the CPI change the Federal Reserve's mind?

Bank of America’s view: If tonight's data is “harder” than expected (for example, if the month-on-month growth exceeds 0.3%), it might lead the Federal Reserve to reassess its interest rate cut plans.

J.P. Morgan's perspective: Tonight's CPI data might be the least “influential” data of the year. With the Federal Reserve having shifted its focus to the labor market, unless CPI experiences a change of more than three standard deviations, the current policy stance will not be shaken.

To summarize:

For tonight's CPI, the market's assessment of its influence is relatively limited, but it is still worth paying attention to subtle changes in the data. If the CPI is below expectations, it may further consolidate the current stance; while if the CPI grows beyond expectations, although it may not directly prevent a rate cut, it could make the Federal Reserve's policy next year appear more conservative. For investors, the importance of upcoming labor market data cannot be overlooked.

Disclaimer: This content is for reference only and does not constitute investment advice.