The firm expects core consumer price inflation to move up by 0.3% in November, similar to economist estimates, citing a rebound in some of the volatile components that declined in October, including used vehicle prices and airline fares.
"An expected rebound in monthly core CPI inflation would suggest the disinflation process is bumpy. However, the underlying disinflation trend remains intact, in our view, as new vehicle prices probably continued to decline, reflecting higher sales incentives and tighter credit conditions. Also, rent inflation remained soft... Beyond November, we think credit tightening in auto loan markets and imbalances in rental housing markets are likely to weigh on core inflation in the coming months, maintaining the disinflation trend.”
As for the impact of the report today, Nomura says that it should not result in a material change to the Fed's near-term outlook. That reinforces the view that we are not likely to see a softer stance by Powell & co. this week in all likelihood. From the weekend:
Timiraos: Fed unlikley to talk about rate cuts and perhaps may not for several months
