US core inflation might tick higher to 0.2%mom - RBS

FXStreet (Barcelona) - FX Trading Strategists at RBS, preview the US inflation data release today, anticipating the steady oil prices to keep the US inflation rate out of negative territory.

Key Quotes

“Starting in the US, steady energy prices likely will keep the y/y headline rate out of the negative territory on a y/y basis and we expect a pickup in core inflation on a m/m basis of 0.2%.”

“The core CPI gain may prove to be the largest m/m jump since May 2014 on the back of an across the board firming in price pressure. Base effects may keep the y/y core rate steady at 1.7% y/y (more details in our economists preview).”

“The moderation in the winter data and the disappointing rebounds in both housing starts and retail sales in March puts a dent in the FOMC’s quest to gain reasonable confidence that inflation is rising over time, but stability in core inflation readings will likely be seen as a positive by the FOMC.”

“As Chair Yellen noted in a late-March speech, she would be “uncomfortable” raising interest rates if measures of inflation, inflation expectation, or wage pressures were to weaken but she does not necessarily need to see a pickup in current inflation as a prerequisite to gaining reasonable confidence and raising interest rates.”

“One of the key measures of inflation expectations, the U of Michigan survey, is due tomorrow as well.”