FOCUS OF THE DAY: Report on inflation in the USA!
Dear traders,
At 15:30 (Kiyv), the US Department of Commerce will publish a report on the size of inflation in January.
Market analysts expect an increase in consumer prices by 0.3%, which is higher than the growth in December by 0.1%. At the same time, it is projected that core inflation will grow by 0.2%, slowing slightly compared to December, when it reached its peak in eleven months.
Compared to the same period last year, inflation is projected to grow by 1.7% against growth of 1.8% in December. The Fed sees core inflation as a more accurate indicator of long-term inflationary pressures, as it does not take into account food and energy prices. The central bank, as a rule, seeks to keep core inflation at 2% or lower.
Acceleration of inflation will stimulate a more rapid increase in the interest rate of the Fed in the coming months compared with previous forecasts.
At the same time, the US Department of Commerce will publish data on the volume of retail sales in January. According to the consensus forecast, it is expected that the volume of retail sales in the US over the past month will grow by 0.5%. It is assumed that the base index of retail sales in the US will increase by 0.2%.
The increase in retail sales indicates economic growth, and a decline in economic decline. Consumer spending accounts for 70% of US economic growth.
In addition to reports on inflation and consumer spending this week, data on producer prices, industrial production, the number of building permits, the volume of construction of new homes, the number of initial applications for unemployment benefits, and investigations on activity in the manufacturing sector of Philadelphia and New York.
Last month, the Fed left the interest rate unchanged, but raised the outlook for inflation, which signaled a rise in the cost of borrowing with the new head of the US central bank, Jerome Powell. At the moment, traders regard the probability of an interest rate increase of 25 basis points as a result of a meeting of the FOMC committee in March at approximately 76%, according to a forecast from Investing.com.
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