CPI Report on Wednesday Expected to Show Tame Inflation

The upcoming Consumer Price Index (CPI) report on Wednesday is expected to show tame inflation, according to prediction markets. The event contract on Kalshi shows traders see a less than 55% likelihood that July's CPI reading comes in above 3.3% on a year-over-year basis.

Traders also see a 15% chance that CPI comes in hotter than 3.4%. In comparison, economists polled by Dow Jones see the headline inflation number coming in at 3.4%, slightly cooler than the 3.5% rate predicted by the consensus forecast.

Cleveland Federal Reserve president Beth Hammack anticipates more than one interest rate hike will be required to rein in what she calls broadening inflation. She said that one 25 basis point move 'probably doesn't do a whole lot for the economy,' and that multiple moves may be necessary to control inflation.

Hammack dissented at the Fed's July policy meeting when the Federal Open Market Committee held interest rates steady, preferring to have raised rates by a quarter percentage point. She believes that interest rates in the range of 3.5% to 3.75% are not 'meaningfully restricting' the economy right now.