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US inflation looking good to hike - BTMU

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 29, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - Analysts at Bank of Tokyo Mitsubishi noted today's PCE reading suggested that although it was coming in lower than expectations and lower than previous, the underlying picture is pointing to a rise, not a fall of inflation in time to come.

    Key Quotes:

    "Based on the most recent wave of rhetoric, the votes for a rate increase are still there. That support is of course conditional on the economic data being in line with FOMC members’ expectations. But the bar is not particularly high on that. The Sept projections indicate a 2015 real GDP projection of 2.0-2.3% and a core PCE annual inflation rate of 1.3-1.4%."

    "The Fed concerns over too low inflation are also hard to understand. The projection for the core PCE annual inflation rate is 1.3-1.4%; the level as of Q3 was 1.3%. Nearly all other measures of inflation point to the prospect of that measure drifting higher. The core annual CPI rate at 1.9% as of September, has increased for four consecutive months and in eight out of the nine months in 2015."

    "In addition, as we have pointed out before, the Cleveland Fed Trimmed Mean annual inflation rate is at 1.7%, the exact average since the current economic expansion began in Q3 2009. Ex-energy services inflation is also drifting higher and is currently at a cyclical high of 2.7%. The underlying inflation picture in the US is pointing to a gradual rise in inflation, not a fall."
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