September rate cut helps cool inflation
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July’s CPI rose 2.9% from the year earlier, which is the lowest inflation reading since 2021.
Cooling inflation practically seals that the Fed will cut rates in September.
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The Fed hiked rates to multi-decade highs in 2022 due to supply bottlenecks and a surge in demand following COVID-19.
They have stayed at a 23 year high of 5.25 - 5.5% for more than a year.
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The Fed is keeping tabs on the US jobs market, which grew more slowly than expected in July.
The broad inflation slowdown gives the Fed latitude to support the labor market with a rate cut.
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Will be the first rate cut in three years.
The only question is: will the cut be 25 bp or 50 bp?
