Sherry Cooper Core Quotations

This report does not give the Fed clear guidance that core inflation's rise in the PPI is topping out. It does, however, hint in that direction.

Financial markets want the Fed to signal possible easing ahead due to the growth slowdown and stock market declines, ... However, the Fed will be reluctant to do that while CPI core is still accelerating.

While the rise in core prices is a bit uncomfortably high, this stand-alone report is not evidence that soaring energy prices are feeding into other prices.

Despite the pop in core PPI inflation in July, there appears to be little pressure lurking on the horizon in the near term. The pipeline measures remain subdued and vehicle pricing appears to have distorted the figures.

Clearly the new paradigm is alive and well, ... While (Federal Reserve Chairman Alan) Greenspan downplayed the policy significance of CPI in his remarks last night, it is still a major positive for investors that core inflation remains benign.

High energy prices keep on working their way through the system. The risks remain skewed to a mild up-creep in core inflation during the months ahead, which will keep the Fed on track for another rate hike in March and likely in May.

The great post-Katrina inflation scare has vanished, with gasoline prices coming back down to Earth and core inflation on track to match the Bank of Canada's latest estimate of 1.6 per cent for Q4.