In pictures: Data that will shape US Fed’s next rate hike

The Federal Reserve is expected to hold its benchmark overnight interest rate steady at its September 19-20 policy meeting. Data in the meantime will shape whether policymakers' economic projections released at the end of that session will still point to one more rate hike by the end of 2023, and rate cuts in 2024.

The US central bank's target policy rate has been raised to the 5.25 per cent-5.50 per cent range from near zero in March of 2022, and inflation measured by the Fed's preferred personal consumption expenditures price index (PCE) fell to 3.3 per cent in July from its peak rate of 7 per cent last summer. While Fed Chair Jerome Powell has said the pieces of the low-inflation "puzzle" may be aligning, he does not trust it yet.

Here is a guide to some of the numbers shaping the policy debate: INFLATION (Released on August 31, next release on September 13): The PCE price index, used to set the Fed's 2 per cent target, rose to 3.3 per cent in July versus 3 per cent in June. The "core" rate stripped of food and energy costs rose 4.2 per cent last month compared to 4.1 per cent in June.

The increase was expected and doesn't throw off the outlook for continued falling inflation. But it does highlight the time it may take for Fed officials to be confident of what is happening.

The separate consumer price index (CPI) had risen slightly in July to a 3.2 per cent annual rate from 3 per cent in June, generally in line with expectations. Core CPI, however, declined slightly to 4.7 per cent from 4.8 per cent in the prior month. In addition, most of the increase was driven by rising shelter costs, which Fed officials feel will cool steadily in the months ahead. Fed officials will see one more CPI print before they meet next month.

JOB OPENINGS: (Released August 29, next release on October 3) Powell keeps a close eye on the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) for information on the imbalance between labor supply and demand, and particularly on the number of job openings for each person without a job but looking for one.

During the pandemic there were nearly two jobs for every jobseeker. That ratio has dropped as the Fed's rate hikes have slowed labor market demand. By July it had fallen to 1.5-to-1, its lowest level since September 2021. Levels around 1.2 were considered tight for the US labor market before the pandemic.

PRODUCER PRICES (Released August 11, next release September 14) The producer price index (PPI) for July came in above expectations, giving the bond market some jitters, as the cost of services rebounded at the fastest pace in nearly a year.

That said, PPI did not appear to reflect enough of a departure from other recent data to shake Fed officials from their respective positions over the appropriate move at the September meeting. A bit hotter than expected, which will buttress the hawks' inclination for a hike, but still showing the trend remained consistent with a moderation in inflationary pressures, which will satisfy the doves' preference to hold steady. Fed officials get one more PPI report before they meet again.

INFLATION EXPECTATIONS (Released August 11, next release August 25) Consumers' estimates of what inflation will average over the next 12 months and the next five years moderated as August began, the University of Michigan reported. At the one-year horizon, expectations slipped to 3.3 per cent, which was the lowest reading since March 2021. At five years, the reading dipped to 2.9 per cent, the lowest in five months.

Policymakers worry about inflation expectations because if they become unanchored and drift upward, consumers may begin acting in ways that will keep actual inflation higher than desired. Fed officials will see two more survey results before their meeting.

EMPLOYMENT (Released on August 4, next release on September 1): The U.S. economy added 187,000 jobs in July, fewer than economists expected and providing fresh evidence of the kind of labor market cooling that Fed officials say is needed to ease inflation pressures.

Hourly wage gains, however, remained strong, holding at 4.4 per cent on a year-over-year basis for a fourth straight month. The unemployment rate ticked down to 3.5 per cent. Both are signs of labor market tightness that may cast doubt on whether the Fed really has done enough.

The mixed results throw the question of labor market strength forward to the September 1 employment report, which will be the last before the next policy meeting.

RETAIL SALES (Released August 15, next release on September 14): Retail sales rose more than expected in July, increasing 0.7 per cent in a sign of US consumer resilience. The continued pace of consumer spending has surprised the Fed, and has been among the reasons overall buoyant economic growth has been on the central bank's radar as an inflationary risk that could warrant higher interest rates.

BANK DATA: Released every Thursday and Friday To some degree the Fed wants credit to become more expensive and less available. That is how increases in its policy rate influence economic activity. But bank failures in the spring threatened broader stress in the industry and a worse-than-anticipated credit crunch. Weekly data on bank lending shows bank credit has fallen on a year-over-year basis since the middle of July. Bank borrowing from the Fed remains elevated but has been slowly declining on a week-to-week basis.