Looking ahead to next week, investors are already readying for the latest consumer price index reading to see if inflation once again cooled.
The January reading for the index, which follows the prices of a wide basket of goods as a gauge of inflation, is due Tuesday. Economists polled by Dow Jones forecast a 0.4% increase in headline CPI on a monthly basis and a 6.2% gain from the prior year.
“Next week is really all about one thing, and that one thing is CPI,” said Scott Ladner, chief investment officer at Horizon Investments.
Market observers also expect the CPI reading to help dictate the Federal Reserve’s next move on interest rates. The central bank last implement a 25 basis point interest rate hike, while Fed Chair Jerome Powell noted inflation was starting to come down but had a ways to go.
Emmanuel Cau, an analyst at Barclays, said inflation data will likely be a market catalyst going forward.
“More than the central banks’ rhetoric, we think it is the inflation data that will dictate the direction of travel for markets from here,” he said in a note to clients Friday.