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Inflation is on the rise in the US and some suspect a rate hike is coming. Perhaps not so fast.

Here is their view, courtesy of eFXdata:

“By the magic of seasonal adjustment and methodology revisions, US CPI managed to be both a bit hotter and a bit cooler than expectations at the same time. On a month over month basis, headline prices were only flat (revisions to seasonal adjustment were a factor here) against expectations for a 0.1% advance, but the 12 month inflation rate fell to 1.6% (vs. a dip to 1.5% expected). Cheaper gasoline prices are key to the low 12 month rate. Core price were up 0.2%, on expectations, with the 12 month rate holding at 2.2% (a tick above consensus). There wasnt much of an impact to adding “bundled” prices for telecom services,” CIBC notes.

“Overall, while core CPI is above 2%, the core PCE that the Fed tracks will still be close to the 2% target. Nothing in this to sway the Fed from doing what its doing now, which is nothing at all on rates until the economy provides more evidence on how its holding up in 2019,” CIBC adds.

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