August inflation data holds key implications for the Fed's next move – here's everything you want to know.

August's Consumer Price Index data will have key implications for the Fed's next move. Today, I'm breaking down what to look out for — and sharing what I learned from some of the sector's best and brightest market-watchers.

The data is out at 8:30 a.m. EDT, so let's get started.

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1. There's been lots of chatter that inflation has peaked, and the broad consensus seems to be that today's data will show inflation cooled for the second month in a row.

Markets expect headline CPI to see its first monthly decline since May 2020, dragged down by declining gas prices.

But even if CPI eased in August, New York Stock Exchange senior market strategist Michael Reinking said that doesn't mean the Fed's going to steer away from an outsized rate hike next week.

"They have been guiding markets to rates being close to 4% by year-end," Reinking told me. "And it seems the preference is to take the medicine at this point as opposed to dragging out the process."

But Fed officials have signaled since last week that even if Tuesday's data is better than anticipated, a 75 basis point move remains likely. Janet Yellen said, too, it'll be tough for the Fed to pull off a soft landing.

Analysts this weekend told Insider's Carla Mozée something similar, saying to expect a "knee jerk" reaction in the stock market if CPI is lower than expected, but investors shouldn't expect a pivot from the Fed.

Reinking added that the report will likely dictate which direction stocks move looking ahead.

"If we get a hot number, we could quickly see a retest of last week's low," he said. "However if there's a beat on both headline and core, I would expect a re-test of the mid-August highs."

Brendan Playford, co-founder of data platform Masa Finance, said a hotter-than-expected report could bring more downward pressure, but that's not what he's expecting.

"Stepping back, if you look at commodities and energy, prices have been coming down," Playford told me in an email. "I would be surprised if this was not reflected in the upcoming CPI data."

What do you think today's inflation data will tell us about the next rate hike and the Fed's policy stance? Email prosen@insider.com or tweet @philrosenn.

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Curated by Phil Rosen in New York. (Feedback or tips? Email prosen@insider.com or tweet @philrosenn).

Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.