For the first time since 2018, the US Consumer Price Index (CPI) will be released on a Friday, this time under highly unusual circumstances.
The September inflation report, set to be released this Friday, arrives amidst an ongoing government shutdown that has halted most other federal data releases. This situation has left the Federal Reserve with limited insights ahead of its important policy meeting on October 29.
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CPI Report Takes Center Stage as Shutdown Halts Other Key Economic Data
No significant reports, including job and retail sales data, will be published until the shutdown concludes. However, the CPI data will be released just five days before the Fed’s meeting on October 29.
“Something unusual is happening this week… Not only is it 5 days before the October 29th Fed meeting,” wrote Adam Kobeissi.
The US CPI report is typically published once a month, usually between the 10th and 13th of the following month. For instance, August’s CPI data was released on September 11, while July’s came out on August 12.
Typically, CPI data is released on a Tuesday or Wednesday at 8:30 a.m. ET by the Bureau of Labor Statistics (BLS), making Friday releases quite rare; the last instance was in January 2018.
Regarding timing relative to Federal Reserve meetings, CPI usually emerges 1–2 weeks prior to the FOMC meeting, allowing policymakers ample time to analyze the data alongside other indicators before making interest rate decisions.
Given these circumstances, the timing has sparked speculation about a bullish inflation print, potentially paving the way for another rate cut. The Fed’s next move heavily rests on this single inflation reading.
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With markets anticipating a near-certain 0.25% rate cut, investors are keenly observing whether softer CPI data could lead policymakers towards a more aggressive 0.5% reduction.
“Currently, there’s about a 99% probability of a 0.25% cut…Should it come in lower than anticipated, the probability of a 0.5% rate cut might rise,” one user remarked.
Inflation, Shutdown, and the Fed’s Dilemma
Analysts surveyed by MarketWatch expect the September CPI report to reflect an increase in consumer prices, although potentially at a slower pace than in August. This could suggest that inflationary pressures are easing.
However, the overall situation remains ambiguous. The ongoing government shutdown has interrupted data collection and added a layer of political and fiscal tension that may influence the Fed’s risk assessment.
In the absence of updated information from labor and retail sectors, policymakers might need to rely on incomplete or outdated data to determine whether inflation is sufficiently slowing to warrant continued easing. Friday’s data release could be the only clear indicator before the Fed’s decision next week.
Meanwhile, Fed officials are expressing growing concerns about a weakening labor market, which supports the push for rate cuts. However, a higher-than-expected CPI reading could complicate matters, forcing the central bank to balance inflation risks against the threat of stalling growth.
