CPI Data Preview: Economists predict that the unadjusted annual CPI rate in the United States will drop to 2.6% in August, marking the lowest level since March 2021

The focus of the market this week turns to inflation data, with the CPI inflation report for August set to be released at 8:30 pm Beijing time on Wednesday. Economists predict that overall US CPI year-on-year will slow from 2.9% in July to 2.6% in August. Several economists have stated that falling natural gas prices and stable food prices may help control overall inflation. If predictions hold true, 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%. These forecasts are consistent with estimates from the Cleveland Fed's Nowcast model. According to CME's "Fed Watch", there is a 70% chance of the Fed cutting rates by 25 basis points in September, and a 30% chance of a cut by 50 basis points. If there is an unexpected slide in inflation, expectations for a rate cut of fifty basis points could rise further. On the other hand, if the report results meet expectations or even show slight increases in inflationary pressure, it won't change market expectations for this round of interest rate adjustments by the Fed but might somewhat suppress dovish rhetoric that follows.