Inflation is now at 2.9%, marking the first time it has fallen below 3% since March 2021.
On Wednesday Consumer Price Index The report (CPI), which tracks the prices of essential goods and services and helps the US Federal Reserve set economic policy, found that prices rose 2.9% in July compared to July 2023.
This could mean that the Fed could lower the federal funds rate, or the interest rate that banks and credit unions use to borrow and lend. the scheduled meeting in September.
The Fed raised rates 11 times between March 2022 and July 2023. It is currently 5.33%, the highest in more than two decades.
“First rate cut since 2020 comes next month.” ESTIMATED Market analysis firm The Kobeissi Letter on Wednesday based on the results of the CPI report.
Brian Coulton, chief economist at Fitch Ratings, said Bloomberg that the report helps “seal the deal for a Fed rate cut in September.”
The Fed has indicated that a rate cut could happen. Fed Chairman Jerome Powell said last month that “a cut in our base rate could be on the table” at the September meeting, provided inflation continues to cool.
Jerome Powell, chairman of the US Federal Reserve. Credit: Al Drago/Bloomberg via Getty Images
The CPI report showed that housing was a major driver of inflation, with costs rising 5.1% over the year and 0.4% over the month.
Shelter contributed almost 90% of monthly growth for all items and 70% of annual growth for all items excluding food and energy.
Food prices also rose during the month, by 0.2%, while energy remained flat. Excluding increases in food and energy, prices rose 3.2% in July year-on-year.