Core CPI (ex Food & Energy) — Impact on Fed Rate Prediction Markets
The Fed targets 2% inflation. Core CPI above consensus signals persistent inflation, making cuts less likely. The single most market-moving indicator for Fed odds.
+/-
per 1σ surprise
↑ Hawkish
when high vs consensus
Pre-calibration
data points
Release Schedule
Frequency
Monthly
Release time
8:30 AM ET
Delay
~12 days after month end
FRED series
CPILFESL
Historical Releases
Data populates automatically once the FRED ingest pipeline is running.
How Core CPI (ex Food & Energy) Moves Fed Rate Prediction Markets
Consumer Price Index excluding food and energy — the Fed's preferred inflation gauge after PCE.
The Fed targets 2% inflation. Core CPI above consensus signals persistent inflation, making cuts less likely. The single most market-moving indicator for Fed odds.
The Bayesian Sensitivity Model
The model calibrates a sensitivity coefficient for each indicator: how many percentage points the cut probability at the next FOMC meeting moves per standard deviation of surprise. For Core CPI, the preliminary coefficient is ±+/- 6–10pp on cut probability. This means ifCore CPI comes in 1 standard deviation above consensus (hawkish surprise), the model reduces cut probability by approximately +/- 6–10pp on cut probability.
These coefficients are preliminary until calibrated from at least 20 historical observations of Kalshi price reactions to each release. The calibration uses a regression of (surprise_zscore × sensitivity_coefficient) against observed Kalshi probability changes, cross-validated against CME FedWatch data going back to 2015.
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