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Inflation is currently at 2.9%, the first time it has fallen below 3% since March 2021.
Wednesday Consumer Price Index According to the Consumer Price Index (CPI) report, a measure that tracks the prices of essential goods and services and helps the Federal Reserve set economic policy, prices rose 2.9% in July compared to July 2023.
This is because the Fed sets the federal funds rate, the interest rate that banks and credit unions use to borrow and lend, at Scheduled meetings In September.
The Federal Reserve raises interest rates 11 times From March 2022 to July 2023. Currently 5.33%, Best For over 20 years.
“The first interest rate cut since 2020 will come next month.” Predicted Market analysis firm Kobeisi Letter said on Wednesday based on the results of the CPI report:
Brian Coulton, chief economist at Fitch Ratings, said: Bloomberg The report will “help lock in the Fed’s interest rate cut in September,” the report said.
The Federal Reserve has signaled it may cut interest rates. Federal Reserve Chairman Jerome Powell I said last month He said if inflation remained subdued “a cut in the policy rate could be considered” at the September meeting.
US Federal Reserve Chairman Jerome Powell. Photo by Al Drago/Bloomberg via Getty Images
According to the Consumer Price Index (CPI) report, housing costs rose 5.1% annually and 0.4% monthly, making it the main driver of inflation.
Housing accounted for nearly 90% of the month-on-month increase across all categories and 70% of the yearly increase across all categories except food and energy.
Food prices also rose 0.2% from the previous month, while energy prices remained steady. Not taking into account the rise in food and energy prices, prices were up 3.2% year-on-year in July.
Related: Fed keeps rates on hold, expects one rate cut by year-end: ‘We remain very cautious about inflation risks’
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