In its CPI inflation watch note released Thursday, Bank of America said in the note previewing next week’s data release that inflation will remain too high for comfort.
The investment bank’s analysts expect April core CPI inflation to print at 0.28% month-on-month (MoM), which would be a moderation from the 0.37% average in the first quarter.
They expect core inflation to also print at 0.3% MoM. “This would be a noticeable moderation from the 0.37% m/m 1Q average,” said the bank. “However, it will not be enough of a moderation to provide much confidence to the Fed in our view.” For headline inflation, BofA forecasts a 0.33% MoM increase.
Elsewhere, Morgan Stanley declared, ” The Descent BegiThe bank sees core CPI inflation coming in at 0.29% MoM in April, with the annual rate at 3.6% year-on-year (YoY).
“Core CPI inflation steps down in April with weaker services as the main driver,” wrote the bank. “We expect weaker car insurance inflation, continued rents disinflation, and lower healthcare. In turn, core goods remain negative but less so on the back of less negative used car inflation.”
Overall, Morgan Stanley sees weaker monthly prints ahead, with faster disinflation starting in the second half of this year. According to the bank, this will provide the Federal Reserve with the confidence it needs that inflation is on a sustained path toward its target.