The latest announcement from Donald Trump has stirred considerable discussion as he declared there will be no tariffs on gold. This update comes amidst rising anticipation of US inflation, expected to trigger increased volatility in the cryptocurrency market, with expectations leaning towards a rise. Before the critical July report for cryptocurrencies is released, a quick look into major banks’ predictions provides valuable insights.
US Inflation Forecasts
The forthcoming hours promise the release of the latest US inflation figures, before the US market opening tomorrow. Yearly increases are anticipated in both core and headline inflation rates. While a slight deceleration of 0.1 points is expected in the monthly headline inflation rise, the opposite is anticipated for the monthly core inflation. This report will further unveil the influence tariffs have on inflation rates.
How are major institutions and banks forecasting tomorrow’s inflation figures? Cryptocurrencies face a potential drop as higher-than-expected inflation figures may diminish the feasibility of interest rate cuts.
As illustrated above, previous CPI data indicates a steady decline since the peak, transitioning to a nearly flat trend over an extended period.
Predictions by Banks
ANZ
ANZ predicts a 0.32% monthly rise for core CPI. Analysts emphasize the deflationary conditions within core services, excluding rent. Any unexpected changes could adversely impact these expectations.
ING Bank
For July CPI, ING forecasts a 3% increase. Is this acceptable for an interest rate cut? ING officials note labor market weakening, believing that an anticipated yet rising CPI figure will not prevent interest rate reductions. Their monthly core inflation expectation stands at 0.4%, above others.
Goldman Sachs
Goldman economists anticipate a monthly increase of 33 basis points in core CPI.
“Should the new labor market trends confirm and the unemployment rate rise, it’s unlikely to restrain the FOMC. Moreover, if the inflation report aligns closely with our expectations, and the market focuses on labor market downside risks and the evolution of the Fed’s views at the upcoming Jackson Hole symposium, this report could serve to eliminate uncertainty.”
Morgan Stanley
Morgan Stanley anticipates a 32 basis point monthly rise and a 3.04% annual CPI. A further monthly increase compared to June is foreseen. Economists expecting a weak trend in service inflation believe the tariff impacts will be more evident in basic goods.
“Our primary scenario is that most price effects related to tariffs will occur during summer. However, there’s a risk of a more gradual and sustained increase in monthly figures until year-end.
The timing of tariff impacts on prices remains significant. Economic models often predict the magnitude of price changes due to tariffs but not their timing or speed. As a result, determining when effects will appear in inflation data poses a challenge. Differentiating signals from noise is difficult, yet we rely on high-frequency data and stock analysts’ views.”
