Inflation is falling in the US. This gives the Federal Reserve room to loosen its monetary policy at its upcoming interest rate meeting.
In the US, price increases slowed significantly in August. Consumer prices rose by 2.5 percent compared to the same month last year, according to the US Department of Labor in Washington. The inflation rate is the lowest since February 2021. In the previous month, the rate was significantly higher at 2.9 percent. Economists had on average expected the rate to decline.
Compared to the previous month, prices rose by 0.2 percent. This was also predicted by economists.
The core inflation rate excluding energy and food remained at 3.2 percent in August, as expected. Compared to the previous month, core consumer prices rose by 0.3 percent – slightly more than forecast. The US Federal Reserve pays particular attention to the core rate. Experts believe it reflects the general price trend better than the overall rate.
The US Federal Reserve is aiming for an inflation rate of two percent in the medium term. The Fed is moving towards easing its monetary policy. The financial markets are assuming that an interest rate cut will take place on Wednesday in a week. The extent of the interest rate move remains unclear, however.
Source: Stern
