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Inflation data, banks kick off earnings season: What to know this week

Consumer price data will offer clues about the Federal Reserve's next policy move, while quarterly results from big banks get fourth quarter earnings season underway.

Alexandra Semenova · Reporter
Sun, January 8, 2023 at 9:43 AM EST

A stock market rally to kick off 2023 will be put to the test next week when investors face a highly-awaited inflation reading and the start of fourth quarter earnings season, which will be led by big banks.

Thursday morning will bring December's Consumer Price Index (CPI), a release likely to dictate bets on whether the Federal Reserve raises interest rates by 0.25% or 0.50% at the start of next month. ... Economists expect headline CPI rose 6.6% over the prior year in December, a downshift from the 7.1% increase seen in November, according to data from Bloomberg. On a month-over-month basis, CPI likely stayed flat.

Core CPI, which removes the volatile food and energy components of the report and is closely tracked by the Fed, is also expected to have risen at a slower pace last month, coming in at 5.7% after a 6% increase in November. Over the prior month, core CPI is expected to rise 0.3% after a 0.2% jump in November.

Policymakers monitor "core" inflation more closely due to its nuanced look at key inputs like housing, while the headline CPI figure has moved largely in tandem with volatile energy prices this year.

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