--- title: US inflation and the FED – can the US central bank ignore the hotter price data? description: "Today’s release of the August consumer price index (CPI) was mostly in line with expectations: Headline numbers came in a tad stronger than expected, and pushed the index up from 2.7% to 2.9%, while the core index (excluding prices for energy and food) stayed at 3.1%. Together with the softer than expected producer prices (PPI) from yesterday and higher than expected initial jobless claims (263k instead 236k, driven by a\nstrong outlier from Texas) the CPI will not pivot the US central bank (FED) away from a 25 basis point rate cut in September. But we don’t expect a larger cut and remain sceptical about the 3 rate cuts the market is currently pricing for the remainder of the year – why is that?" image: https://blog.syzgroup.com/hubfs/iStock-1386672172.jpg --- [![Syz Private banking](https://blog.syzgroup.com/hs-fs/hubfs/Logo.png?width=140&name=Logo.png "Syz Private banking")](https://www.syzgroup.com/fr) ## **Thinking** out loud [Subscribe](https://25733253.hs-sites-eu1.com/newsletter-signup?hsLang=en) [![Contact Us](https://hubspot-no-cache-eu1-prod.s3.amazonaws.com/cta/default/25733253/3d762f49-4e71-4f99-97b1-bf6781ef3da2.png)](https://hubspot-cta-redirect-eu1-prod.s3.amazonaws.com/cta/redirect/25733253/3d762f49-4e71-4f99-97b1-bf6781ef3da2) - [OUR SERVICES](https://www.syzgroup.com/en/private-banking) - [ABOUT SYZ](https://www.syzgroup.com/en/about/welcome-to-syz) - [CAREERS](https://www.syzgroup.com/en/careers) - [PRESS](https://www.syzgroup.com/en/news) - [Blog Homepage](https://blog.syzgroup.com) - [Slow Food for Thought](https://blog.syzgroup.com/slow-food-for-thought) - [Focus](https://blog.syzgroup.com/slow-food-for-thoughts/tag/focus) - [Asset allocations Insights](https://blog.syzgroup.com/slow-food-for-thoughts/tag/asset-allocation-insights) - [Market Outlook](https://blog.syzgroup.com/slow-food-for-thoughts/tag/market-outlook) - [Swiss Perspectives](https://blog.syzgroup.com/slow-food-for-thoughts/tag/swiss-perspectives) - [Syz the moment](https://blog.syzgroup.com/syz-the-moment) - [Crypto corner](https://blog.syzgroup.com/crypto-corner) - [Syz AI Insights](https://blog.syzgroup.com/syz-ai-insights) - [Fast Food for Thought](https://blog.syzgroup.com/fast-food-for-thought) - [The week in seven charts](https://blog.syzgroup.com/fast-food-for-thoughts/tag/the-week-in-seven-charts) - [Flash](https://blog.syzgroup.com/fast-food-for-thoughts/tag/flash) - [Fixed Income Weekly](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-fixed-income) - [Equity Weekly](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-equities) - [Global markets outlook](https://blog.syzgroup.com/fast-food-for-thoughts/tag/global-markets-outlook) - [CONTACT](https://www.syzgroup.com/en/contact-us/form) - [ENGLISH](https://www.syzgroup.com/) - [FRANÇAIS](https://www.syzgroup.com/fr) - [Slow Food for Thought](https://blog.syzgroup.com/slow-food-for-thought) - [Focus](https://blog.syzgroup.com/slow-food-for-thoughts/tag/focus) - [Asset allocations Insights](https://blog.syzgroup.com/slow-food-for-thoughts/tag/asset-allocation-insights) - [Market Outlook](https://blog.syzgroup.com/slow-food-for-thoughts/tag/market-outlook) - [Swiss Perspectives](https://blog.syzgroup.com/slow-food-for-thoughts/tag/swiss-perspectives) - [Fast Food for Thought](https://blog.syzgroup.com/fast-food-for-thought) - [Flash](https://blog.syzgroup.com/fast-food-for-thoughts/tag/flash) - [Weekly Fixed Income](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-fixed-income) - [The week in seven charts](https://blog.syzgroup.com/slow-food-for-thoughts/tag/the-week-in-seven-charts) - [Global markets outlook](https://blog.syzgroup.com/fast-food-for-thoughts/tag/global-markets-outlook) - [Weekly Equities](https://blog.syzgroup.com/fast-food-for-thought/tag/weekly-equities) - [Syz the moment](https://blog.syzgroup.com/syz-the-moment) - [Crypto corner](https://blog.syzgroup.com/crypto-corner) - [Syz AI Insights](https://blog.syzgroup.com/syz-ai-insights) - [Our Services](https://www.syzgroup.com/en/private-banking) - [About Syz](https://www.syzgroup.com/en/about/welcome-to-syz) - [Careers](https://www.syzgroup.com/en/careers) - [Press](https://www.syzgroup.com/en/news) - [Contact](https://www.syzgroup.com/en/contact-us/form) - [English](https://www.syzgroup.com/) - [Français](https://www.syzgroup.com/fr) ## **Sign-up** for our newsletter This website uses cookies to enhance user navigation and to collect statistical data. 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This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document. [Food for Thoughts](https://blog.syzgroup.com/fast-food-for-thought/tag/food-for-thoughts) ### US inflation and the FED – can the US central bank ignore the hotter price data? Today’s release of the August consumer price index (CPI) was mostly in line with expectations: Headline numbers came in a tad stronger than expected, and pushed the index up from 2.7% to 2.9%, while the core index (excluding prices for energy and food) stayed at 3.1%. Together with the softer than expected producer prices (PPI) from yesterday and higher than expected initial jobless claims (263k instead 236k, driven by a strong outlier from Texas) the CPI will not pivot the US central bank (FED) away from a 25 basis point rate cut in September. But we don’t expect a larger cut and remain sceptical about the 3 rate cuts the market is currently pricing for the remainder of the year – why is that? [![Reto Cueni, PhD](https://blog.syzgroup.com/hubfs/Reto%20Cueni.jpg)](https://blog.syzgroup.com/fast-food-for-thought/author/reto-cueni) [**Reto Cueni, PhD**](https://blog.syzgroup.com/fast-food-for-thought/author/reto-cueni) Chief Economist **Thursday, 09/11/2025** | - ![Pdf](https://blog.syzgroup.com/hubfs/pdf%20(1).png) - - - - ## **Why we remain sceptical about witnessing 3 rate cuts by the end of the year** The underlying price pressures from tariffs are still getting through and some are increasing (Foods) while other are abating (mostly discretionary goods). But it is not the “tariff push through” of goods prices that would worry any traditional central banker in the USA, but rather the price pressures in the service sector caused by domestic factors. When we look at measures such as services ex energy or even services less shelter prices, both remained at significantly elevated levels in August at 3.6% and 4% respectively, and thus quite far off the 2% target of the FED.  In combination with the PPI numbers, which came in yesterday significantly weaker than expected on average, those categories that filter into the PCE components – the Federal Reserve’s preferred measure of price pressures is the personal consumption expenditure index – showed mostly an increase in price pressures. Together with today’s CPI numbers, these data point to a core PCE figure of 3.0% for August (compared to August 2024) and the PCE measure for domestic underlying price pressures, the so called “Supercore PCE”, of above 3.3%: This would mark a higher figure than the peaks from last February 2025 or December 2024 when the FED did stop its rate cuts. **Chart 1: Headline Inflation is grinding higher in the USA** ![](https://blog.syzgroup.com/hs-fs/hubfs/image-png-Sep-11-2025-04-43-50-4047-PM.png?width=762&height=571&name=image-png-Sep-11-2025-04-43-50-4047-PM.png) Source: BLS, Federal Reserve, FactSet, Syz Group --- ## ** What to expect from the FED in the remainder of the year?** We conclude that the FOMC, the FED’s key rate setting body, which is still made of a majority of rather “traditional” central bankers (at least until the end of the year) will not cut at each of the next 3 meetings if the price data comes in as elevated as the August reading today or even slightly higher. We and the consensus are expecting a further increase in CPI and PCE data and, hence, see the FED’s room for rate cuts as limited. Unless we see a further deterioration of the labour market data, we expect the FED not be able to ignore the significantly elevated CPI and PCE levels. Hence, we pencil in a maximum of 2 rate cuts for the remainder of the year, and remain sceptical about the third rate cut now priced in by the end of 2025 by the market. We believe that the market is underestimating inflationary pressures and overestimating potential weakness in the labour market, as changes in the US immigration policy appear to have overturned conventional expectations of a balanced US labour market. Of course, any new data point can change this assessment and we remain vigilant in order to adapt to any changes of the current situation.  **Chart 2: Leading indicator still points to significant price pressures** **![](https://blog.syzgroup.com/hs-fs/hubfs/image-png-Sep-11-2025-04-57-50-8600-PM.png?width=756&height=567&name=image-png-Sep-11-2025-04-57-50-8600-PM.png)**  Source: BLS, ISM, FactSet, Syz Group  --- #### Disclaimer This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document. Read More ## Related Articles [Food for Thoughts](https://blog.syzgroup.com/fast-food-for-thought/tag/food-for-thoughts) #### [The Fed hikes: answers to 7 FAQs](https://blog.syzgroup.com/fast-food-for-thought/the-fed-hikes-answers-to-7-faqs?hsLang=en) Flash note - Investment strategy **[Charles-Henry Monchau, CFA, CMT, CAIA](https://blog.syzgroup.com/author/charles-henry-monchau?hsLang=en)** | 17/09/2026 [Food for Thoughts](https://blog.syzgroup.com/fast-food-for-thought/tag/food-for-thoughts) #### [Fed hikes key rate as Warsh keeps a close eye on inflation](https://blog.syzgroup.com/fast-food-for-thought/fed-hikes-key-rate-as-warsh-keeps-a-close-eye-on-inflation?hsLang=en) Flash note **[Reto Cueni, PhD](https://blog.syzgroup.com/author/reto-cueni?hsLang=en)** | 17/09/2026 [Food for Thoughts](https://blog.syzgroup.com/fast-food-for-thought/tag/food-for-thoughts) #### [AI: the capex cycle survives the weekend's safety debate](https://blog.syzgroup.com/fast-food-for-thought/ai-the-capex-cycle-survives-the-weekends-safety-debate?hsLang=en) A weekend debate over “recursive self-improvement,” the risk that AI could accelerate its own development to the point where humans struggle to stay meaningfully in control, prompted some in the industry to call for a more cautious pace of development. We think the correction in AI stocks on Monday was overdone. Investors may be conflating two separate questions: how fast frontier AI capability should advance, and how fast the world adopts the AI that already exists. The first is genuinely more uncertain. The second isn’t, and it’s the second that drives datacentre capex cycle. **[Jakub Dubaniewicz](https://blog.syzgroup.com/author/jakub-dubaniewicz?hsLang=en)** | 15/09/2026 ## Straight from the Desk # Syz the moment Live feeds, charts, breaking stories, all day long. [Discover more](https://blog.syzgroup.com/syz-the-moment?hsLang=en) ## **Thinking** out loud Sign up for our weekly email highlighting the most popular posts. 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