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CPI data - What to know in markets Friday

Heidi Chung

Following speeches from Federal Reserve Chairman Jerome Powell and Vice Chairman Rich Clarida on Thursday, the U.S. Bureau of Labor Statistics will be releasing Consumer Price Index (CPI) data on Friday morning. The Fed often looks to CPI data as a key inflation gauge, and given that it was revealed in the Federal Open Market Committee’s (FOMC) December meeting minutes that a few non-voting members were reluctant to hike rates due to inflation pressure concerns, the CPI data for December will be even more closely watched.

“Given that the FOMC focuses on core inflation in its near-term policy deliberations, a downside miss on the headline is unlikely to ring alarm bells if driven by drops in energy and/or food. An increase in core CPI of 0.1-0.2% would be consistent with the recent trend,” Wells Fargo wrote in a note.

Economists polled by Bloomberg are expecting “core” consumer prices, excluding the cost of food and gas, to have risen 2.2% in December from a year ago. The Fed is targeting 2% inflation.

“While the December CPI report may not be a game changer for the market's perception of near-term hiking prospects, a solid print in line with our expectation (core CPI +0.20% month-over-month and 2.2% year-over-year) should keep Fed rate hikes in play this year if various uncertainties are resolved,” Deutsche Bank wrote in a note to clients on Thursday.

There are no major corporate earnings reports scheduled for Friday.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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