Weaker Core Inflation Could Delay US Rate Hikes

Investors are closely watching the upcoming US inflation data release on Wednesday for signs of potential changes in Federal Reserve policy. According to Bank of America strategists, a weaker-than-expected reading could delay interest rate hikes and reduce their necessity. A stronger-than-expected core inflation figure, however, would raise the prospects of a September rate increase.

The note from Bank of America highlights the importance of Wednesday's inflation data release, with consensus forecasting a 0.2% change in core inflation. The strategists warn that a meaningful downside miss to this target could be interpreted as delaying or reducing the need for interest rate hikes altogether.