Consumer price index (CPI) inflation data scheduled for release at 8:30 a.m. ET may further reduce the likelihood of a Federal Reserve interest rate hike at its September policy meeting, coming on the heels of Friday's weaker-than-expected July jobs report.

Odds of an additional rate tightening at the central bank's next meeting currently stand just below 50%, reflecting growing market uncertainty about the trajectory of monetary policy. The Fed raised its benchmark federal funds rate to a 5.25%–5.50% range in July, the highest level in more than two decades, as part of its campaign to bring inflation back toward its 2% target. The Labor Department's CPI report is one of the last major inflation readings Fed officials will weigh before their September decision.

Technology goods are among the product categories that could contribute to a firmer-than-anticipated inflation print, partly driven by recent price increases from Apple (AAPL). The iPhone maker has raised prices across portions of its hardware lineup, which could influence the consumer electronics components of the inflation gauge. Economists also closely watch core CPI, which strips out volatile food and energy costs and is often seen as a better gauge of underlying inflation trends.

S&P 500 futures were active ahead of the data release, with market participants positioning for the potential impact on expectations for future rate decisions. Beyond CPI, investors are also looking ahead to the Personal Consumption Expenditures price index—the Fed's preferred inflation measure—as well as the August employment report, both due before the September meeting.

The July jobs report released last Friday signaled a cooling labor market, adding to evidence that may support the Federal Reserve's case for pausing its tightening cycle. Fed officials have repeatedly emphasized that their decisions remain data-dependent, with inflation and employment metrics serving as the primary inputs for policy deliberations.

Source: Investor's Business Daily