Barclays Housing and CPI forecast into FOMC


16 March, AtoZForex, London – For today’s fundamental data release scheduled at 12:30GMT ahead of the FOMC meeting and interest rate decision, Barclays provided its Industrial production, Housing starts, and more importantly CPI forecast.

CPI forecast

“We expect the headline CPI to have fallen 0.2% m/m on account of sharply lower seasonally adjusted prices for retail gasoline,” Barclays projected, adding that “we look for core CPI to be up a modest 0.1% m/m, as we expect the January strength in core goods to reverse in this month’s release.”

These changes should lower headline CPI inflation to 0.9 percent y/y and keep core CPI inflation unchanged at 2.2% on year over year basis. In addition, Barclays looks for the CPI NSA index to be released at 236.9.

Barclays Housing and CPI forecast into FOMC Source: Barclays research, (click to zoom-in)

Housing starts forecast

“We forecast housing starts to rise 2.0% m/m to 1.12mn units in February,” Barclays projected.

Residential construction came lower than expected last month, with subdued single- and multi-family activity across the states. Despite the weak turnout last month, Barclays still sees the US housing market in the recovery mode. A 2% rise in February Housing starts would bring activity back to trend and suggest further gains in the upcoming months.

Industrial production forecast

“We look for total industrial production to have declined 0.2% m/m in February, with a 0.2% m/m gain in manufacturing output offset by sharp declines in mining and utilities output,” Barclays projected.

Within manufacturing, Barclays expect modest increase in auto assemblies and chemical production to be supported by a large increase in petroleum refining.

Into FOMC

Despite the scheduled news, we could expect the data to be overshadowed by today’s FOMC meeting at 18:00 GMT along with economic projections, and Federal funds rate decision which is expected to remain unchanged.

It is expected that market gyrations will be ample, as traders try to get in position for the anticipated Fed rate decision. Investors and traders had earlier priced out the likelihood of any rate rise this year, considering that economic data from the US at the start of the year was soft.

Also see: Are Central Banks monetary actions causing more damage?

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