Us CPI

Economists upgraded the RBA's tightening path as bets fly that the US Federal Reserve will raise rates 1 percentage point next week.

Bond futures are fully priced for a 0.25 percentage point increase by the Reserve Bank in October, on the way to a peak of around 3.8 per cent by June up from 3.5 per cent on Tuesday. Nomura formalised its forecast for a full percentage point increase to the Fed funds rate next week, up from 0.75 percentage points previously projected. “The stickier inflation proves that a higher nominal Fed funds rate is needed to achieve the FOMC’s objectives,” said Mr Martin. It’s a matter of how much damage there will be.” Trimmed mean is a measure of core inflation and is the RBA’s preferred indicator. Email Cecile at [[email protected]](mailto:[email protected]) The Euro Stoxx 50 retreated 1.7 per cent and the FTSE 100 1.2 per cent. They had expected only a 0.75 percentage point increase before the CPI data. Meanwhile, US Treasury yields spiked and the bond market’s most reliable recessionary indicator – the inverted spread between short-and long-term rates – widened further. [The US CPI rose 0.1 per cent month-on-month, and edged up 8.3 per cent year-on-year.](https://www.afr.com/world/north-america/us-inflation-comes-in-higher-than-forecast-big-fed-hike-expected-20220913-p5bhug) A Reuters poll had suggested the monthly CPI rate of change would dip by 0.1 per cent, and year-over-year growth would rise by 8.1 per cent. Australian bond yields jumped in sympathy, with the three-year rate 10 basis points higher to 3.36 per cent and the 10-year 6 basis points higher at 3.7 per cent. Nomura upgraded its forecast for the Reserve Bank’s October cash rate decision to a 0.5 percentage point increase to 2.85 per cent, up from a previous forecast for an increase of 0.25 percentage points.