Consumer Price Index and Federal Reserve Rate Cut
The Consumer Price Index has landed below 3%, paving the way for the Federal Reserve to cut rates next month. Inflation is trending down, and the economy is showing signs of stress. Housing costs have been a major factor in inflation but are expected to improve. Energy prices were flat for July, and food prices rose modestly. The Fed is expected to cut its benchmark interest rate by at least a quarter-point at its next meeting.
Key Points
- CPI below 3%
- Expected rate cut by Federal Reserve
- Housing costs as a major factor
- Flat energy prices in July
- Expected improvement in inflation picture
Pros
- Inflation trending down
- Economy showing signs of stress
- Expected improvement in housing costs
Cons
- Housing costs have been a major factor in inflation
- Labor market slowing down