The US Consumer Price Index, a key figure for the Federal Reserve’s (FED) rate policy, was released. It came in below 3% for the year and was lower than the previous month.
The US inflation stood at 2.9% annually in July of this year, below 3% for the first time since 2021. This is reflected in the Consumer Price Index data of the northern country. And the figure for the month was 0.2%, with a decrease compared to June. The data is in line with market expectations, although slightly lower.
Economists in a Bloomberg survey They expected the index to probably rise 3% from a year earlier.in line with a 3% increase in June. While this is faster than the 2% that was normal before the coronavirus pandemic, it is much slower than the peak of 9.1% in 2022.
Core inflation was also 3.2% annually, in line with expectations. The data, which was published on Wednesday, is key to obtaining more signals about the economy of that country and was expected to have cooled slightly in July compared to the previous month. a trend that is likely to increase optimism about lower interest rates.
Rate cut expectations are confirmed
This confirms the expectation that the Federal Reserve to start cutting rates in September, amid growing signs of a cooling US economy, but investors are divided on whether the US central bank will allow a 25 basis point or 50 basis point cut.
And the Fed recently noted that any more encouraging economic data will pave the way for a rate cut in September, and that it did not need to see inflation hit its 2% annual target to begin cutting rates.
“Overall, inflation data poses a double risk: a high reading could raise fears of stagflation, while a low reading could give further encouragement to the stagflation narrative.” hard landing“Morgan Stanley said in a recent note, although it added that it expected the inflation trend to continue.
Source: Ambito
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