The ranges of estimates are important in terms of market reaction because when the actual data deviates from the expectations, it creates a surprise effect. Another important input in market's reaction is the distribution of forecasts.

In fact, although we can have a range of estimates, most forecasts might be clustered on the upper bound of the range, so even if the data comes out inside the range of estimates but on the lower bound of the range, it can still create a surprise effect.

CPI Y/Y

  • 2.7% (2%)
  • 2.6% (8%)
  • 2.5% (49%) - consensus
  • 2.4% (37%)
  • 2.3% (2%)
  • 2.2% (2%)

CPI M/M

  • 0.3% (13%)
  • 0.2% (65%) - consensus
  • 0.1% (21%)
  • 0.0% (1%)

Core CPI Y/Y

  • 3.1% (2%)
  • 3.0% (21%)
  • 2.9% (67%) - consensus
  • 2.8% (8%)
  • 2.7% (2%)

Core CPI M/M

  • 0.5% (3%)
  • 0.4% (4%)
  • 0.3% (66%) - consensus
  • 0.2% (25%)
  • 0.1% (2%)

As always, the focus will be on the Core figures. We can notice the expectations are skewed more towards the softer side, especially with the M/M reading.

Right now, the market is pricing 44 bps of easing for the Fed in 2025 and higher than expected Core CPI figures will likely see traders lean more towards just one cut this year. On the other hand, lower than expected numbers should strengthen the expectations for two cuts this year and will likely start to price in a third cut.

Source: Forex Live