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The market response to the US CPI data should be viewed as subdued, characterized by some initial choppy movements. Economists at OCBC Bank assess the market outlook following the release of inflation data.
CPI outcome adds marginally to the risk that the median dot may be pushed higher
In general, the CPI result aligns with the patience advocated by Fed Chair Powell, although it lacks significant impact on the trajectory of monetary policy. However, it slightly increases the risk of upward adjustment to the median dot.
It’s worth noting that the December dot plot leans towards the upside, meaning that even a minor shift in two dots higher could influence the median dot. Such a development would have a notable impact on the market.
Until the FOMC meeting, the market is likely to remain in a holding pattern.
