Fed Mester: Need to see a convincing slowdown in inflation before slowing rate hike

Cleveland Fed Pres. Loretta Mester says:

  • Will need to see a convincing inflation slowdown before slowing Fed rate hikes
  • inflation risks may be biased to the upside and warrant doing more upfront
  • after point increases in June and July, the Fed will have to see what more is needed on the data in the meantime
  • Expect PCE inflation

Tomorrow, US CPI data will be released at 8:30 a.m. ET. The month’s stock is expected to rise 0.2% and food and non-food core energy are expected to rise 0.4%. Year-over-year, the stock is expected to fall 8.5% to 8.1%, while food and non-food energy are expected to fall 6.5% to 6.0%.

A year ago, the MoM stood at +0.8%. With expectations at 0.2% (a decline of -0.6% year-on-year from 0.8% last year), the decline from 8.5% to 8.1% has the potential to to be weaker.

If you were to add the MoM over the past 12 months (see the numbers on the table below), the total MoM numbers come to 8.3%. If you were to replace 0.2% with 0.8% this month (the expected rise this month), the sum of the monthly figures would come in at 7.7% well below the estimate of 8, 1%.

There seems to be room for the possibility of a yearly number below 8% for the number of stocks if the number comes in at the expected level of 0.2%.

IPC MoM figures over the last 12 months

On the core measure (excluding food and energy (see monthly figures below), the 0.4% expectation would replace a 0.9% gain last year (-0.5%) If last month the year-over-year calculation was +6.5%, that would imply a rate of 6.0% (0.9% replaced by 0.4% which is the estimate).

Adding up the MoM earnings for the current 12 months (see main monthly figures below), the numbers add up to 6.2%. If 0.4% replaces 0.9% from last month, the sum of the months would be 5.7%. It is possible that the number will be lower if the number arrives as expected.

Basic CPI

Sum of core CPI for months


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