The outlook for inflation risks, based on next week’s US CPI, PPI and retail sales releases as well as comments from senior Federal Reserve officials, will be a key focus for the market.
Next week, the US consumer price index (CPI), producer price index (PPI) and retail sales figures will be released in succession. These indicators are important for assessing the direction of the US economy and could also affect the performance of tech stocks. The large share of private consumption in gross domestic product is once again attracting attention.
Some senior Federal Reserve officials have expressed the view that inflation risks outweigh employment risks, while others have said that entrenched inflation would pose the greatest risk. However, CPI is expected to remain in the mid-2% range year on year, and no sharp acceleration is anticipated.
The market broadly expects about one additional rate hike to be necessary during the course of next year. Comments since the September meeting have led to the view that flexibility remains over the timing of the hike, with emphasis placed on gathering information and making decisions based on the data.
Factors including the situation in the Middle East, which is driving up energy prices, and tight supply and demand for components due to AI-related investment have been cited as concerns that could affect the course of inflation. These factors are expected to remain a focus in assessing monetary policy going forward.