Economists expect the seasonally adjusted CPI annual rate in the U.S. at the end of August to drop to 2.6%, the lowest level since March 2021

ChainCatcher news, this week's market focus shifts to inflation data, with the CPI inflation report for August set to be released at 8:30 PM Beijing time on Wednesday. Economists expect that the overall CPI in the U.S. for August will slow to 2.6% year-on-year from 2.9% in July. Several economists have indicated that falling gas prices and stable food prices may help control overall inflation. If the predictions hold, the year-on-year CPI inflation will hit a new low since March 2021. The core CPI inflation, excluding food and energy prices, is expected to drop to 3.2% year-on-year. These forecasts align with the estimates from the Cleveland Fed's Nowcast model.

According to CME's "FedWatch," the probability of the Federal Reserve cutting rates by 25 basis points in September is 70%, while the probability of a 50 basis point cut is 30%. If inflation unexpectedly declines, the expectation for a 50 basis point cut is likely to rise further. On the other hand, if the report meets expectations or even shows a slight increase in inflationary pressures, it may not change the market's expectations for the Fed's rate adjustment this time, but it could somewhat suppress the subsequent dovish rhetoric. (Jin Shi)