News Digest:

Inflation rates in the United States could pick up modestly in July, but it would be too small to derail the widely anticipated Federal Reserve interest rate cut in September. The consumer price index is expected to rise 0.2% from June, but this would not impact the annual metrics to an extent to worry the Fed, says a report.

In parallel, the July jobs report indicated that US employers scaled back hiring with the unemployment rates rising for a fourth month, triggering a key recession indicator that contributed to a global stock market selloff.

The report by Bloomberg says these two data points would bolster the Fed’s confidence to start lowering lending rates while shifting their attention to the fragile labor market. Now the expectation is that the shelter costs slowdown that began in June would continue.

Takeaway:

The report noted that the Fed would also scrutinize the producer price index to check the personal consumption expenditures in the economy as well as the retail sales numbers, which the market feels, could suggest an overall pick up in retail sales during July.

End Notes

Source: https://www.bloomberg.com/news/articles/2024-08-10/fed-rate-cuts-small-us-inflation-pickup-won-t-derail-a-september-move