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CPI, PPI, and monetary policy: A complete analysis
Posted in BVI | EN | Labs | Forex
US CPI and Fed by OANDA (1)

A comprehensive guide to Consumer Price Index (CPI) and the Producer Price Index (PPI), and explaining their significance in economic analysis. It covers the calculation of CPI, the relationship between CPI and PPI, and how these two influence monetary policy decisions.

Introduction to the US Consumer Price Index (CPI)

What is the CPI?

CPI in USA vs. CPI in Japan

CPI vs. PPI (Producer Price Index)

What is the "base year" for CPI?

Calculating CPI

CPI is usually calculated using the Laspeyres Index.
Laspeyres Index

The evolution of the CPI

US CPI - Source US Bureau of Labor Statistics
US CPI - Source US Bureau of Labor Statistics
Month Raise (in bps) Fed Funds Post Raise
March 2022 +25 0.25% to 0.50%
May 2022 +50 0.75% to 1%
June 2022 +75 1.50% to 1.75%
Juy 2022 +75 2.25% to 2.50%
September 2022 +75 3% to 3.25%
November 2022 +75 3.75% to 4%
December 2022 +50 4.25% to 4.50%
February 2023 +25 4.50% to 4.75%
March 2023 +25 4.75% to 5%
May 2023 +25 5% to 5.25%
July 2023 +25 5.25% to 5.50%

CPI impact on the exchange rate

CPI and monetary policy

The relationship between interest rates and exchange rates

IR US vs Japan
This is an example only and does not consider factors such as exchange rates and taxes.

Analyse why interest rates are rising

Exchange rates may change dramatically around CPI release

The CPI in summary

Frequently Asked Questions

What is the CPI?