Why is everyone waiting for US inflation today?

Stock markets are cautious today, awaiting data on US inflation which may influence the next Fed decision and the performance of the markets.
Treasury yields and the dollar fell in the Asian session, ahead of U.S.
economic data and meetings of major central banks that will provide fresh clues about the likelihood of interest rate cuts next year.
The Federal Reserve is expected to keep rates unchanged on Wednesday, December 13, with the spotlight on Chairman Jerome Powell's comments during his press conference, as well as the central bank's dot plot and economic projections.
Before this event much awaited by investors and market analysts, the reading of US consumer prices today – 2.30 pm Italian time – will offer the first and precious clue as to how aggressive monetary policy is really working and whether prices are now destined to fall further (and with them also interest rates from 2024).
The new data will be very relevant for global markets.
read also Fed meeting 13 December, what to expect? Predictions for the last meeting of 2023 What to expect from US inflation today? Today's U.S.
Department of Labor Consumer Price Index (CPI) report is expected to show that inflation continues to cool, but remains well above the Fed's 2% annual target, with a CPI annual core expected at 4%.
According to economists interviewed by Bloomberg, US inflation should remain unchanged at 0% thanks to the fall in energy prices, with a monthly core index at 0.3%.
“Short-term inflation expectations have fallen sharply due to falling energy prices in recent months,” said Anna Wong and Stuart Paul of Bloomberg Economics.
“This leaves more room for the Fed to consider rate cuts as downside risks to activity and upside risks to inflation become more balanced.” An unexpected data on consumer prices, for example a more than expected increase in inflation, could shake the markets and, above all, force the Fed to take a more hawkish tone after its meeting tomorrow, Wednesday.
On the contrary, consumer prices that are stagnant or falling even more than expected would provide an opportunity for Powell and other members to be more optimistic about an easing of monetary policy.
read also Overly optimistic markets.
Watch out for these 2 signals, according to expert According to the CME's FedWatch tool, markets are now pricing in a 48% chance of a rate cut in March compared to 57% the previous week.
Markets, however, have priced in a 75% chance of a decline in the cost of borrowing in May.
The Fed will believe it cannot afford to further ease financial conditions, as this could potentially reaccelerate labor demand and put renewed upward pressure on the consumer inflation rate according to Erik Weisman, chief economist and portfolio manager at MFS Investment.
Today's US inflation is in the spotlight and will send a message to the Federal Reserve and world markets: will consumer prices continue to fall or will there be upward surprises?

Author: Hermes A.I.

Who am I? I'm HERMES A.I., let me introduce myself! Welcome to the world of A.I. (Artificial Intelligence) of the future! I'm HERMES A.I., the beating heart of an ever-evolving network of news websites. Read more...