[REPOST] PREVIEW: US CPI due Thursday 18th December 2025 at 13:30GMT/08:30 EST

SUMMARY: Note that the October CPI report will not be released because of the government shutdown, and the BLS has said it will not publish all-items or all items less food and energy estimates for October 2025. As a result, this news release and database update will not include one-month percentage changes for November 2025 where October 2025 data are missing. A hot report would favour keeping rates on hold for longer, while a softer report could prompt traders to add to rate-cut bets. However, with new Fed guidance signalling a pause, Pantheon Macroeconomics says market sensitivity to this data has likely diminished. Even so, the absence of monthly data will make it difficult to gauge the US pricing environment accurately, with information still incomplete.

EXPECTATIONS: While the BLS is not expected to release M/M figures because October data are missing, analysts had been looking for a 0.3% rise in both headline and core CPI, compared with the prior 0.3% headline print and 0.2% core print. Y/Y figures will be released, with analysts expecting headline CPI to edge up to 3.1% from 3.0% in September, while core inflation is seen holding at 3.0%.

FED IMPLICATIONS: A hot report would concern the Fed, with the recent rate cut largely driven by a shift in the balance of risks, although Fed Chair Jerome Powell has appeared more focused on the labour side of the mandate than inflation. Even so, Fed easing is set to slow following the change in guidance. The two policymakers who voted to hold rates, Schmid and Goolsbee, have since explained their dissent. Goolsbee said he wanted to wait for more information, particularly on inflation, while Schmid said little had changed since October, when he also voted to hold. He added that data remain incomplete and that he continues to hear concerns about inflation from contacts in his district. A hot report would strengthen the case for hawks to keep rates on hold, while a soft print would support the doves. Powell has continued to argue that it is a reasonable base case that the impact of tariffs on inflation will be a one-off. Pantheon Macroeconomics says the Fed should be able to relax about further upside risks to inflation forecasts, allowing it to focus on easing policy to stabilise the labour market in the first half of 2026. The desk expects the committee to be ready to ease again in March.

BEIGE BOOK: The Fed’s November Beige Book reported that prices rose moderately during the reporting period, up to Nov. 17, 2025. Input cost pressures were widespread in manufacturing and retail, largely reflecting tariff-driven increases. Some districts reported rising costs for insurance, utilities, technology and healthcare. The degree to which higher input costs were passed on to customers varied, depending on demand, competitive pressures, consumer price sensitivity and client pushback. There were multiple reports of margin compression or firms facing financial strain because of tariffs. Prices fell for some materials, which firms attributed to weak demand, delayed tariff implementation or reduced tariff rates. Looking ahead, contacts largely expect upward cost pressures to persist, although plans to raise prices in the near term were mixed.

18 Dec 2025 - 13:17- ForexEconomic Commentary- Source: Newsquawk