Washington September 11 2024: US inflation fell to 2.5 per cent in August, setting the stage for the Federal Reserve to start cutting interest rates at its meeting next week.
The latest annual consumer price index compared with July’s 2.9 per cent pace, and was marginally below the estimate of 2.6 per cent from economists polled by Reuters.
Core CPI, which excludes volatile food and energy prices held steady at 3.2 per cent, according to data published by the Bureau of Labor Statistics on Wednesday.
The inflation data marks one of the last major economic releases ahead of the Fed’s next meeting on September 18, when it is expected to lower rates from their current range of 5.25 to 5.5 per cent, a 23-year high.
Last month, a weak payrolls report for July sparked fears of an economic downturn in the US, pushing traders to increase bets that the US central bank would cut rates by a larger-than-usual half point in September.
The data for August, released last Friday, showed that US employers had added 142,000 new jobs that month, up sharply from a downwardly revised figure of just 89,000 for July, but still below consensus forecasts.
The Fed has been seeking assurance that inflation is cooling sustainably before lowering interest rates. But evidence of sharper deterioration in the jobs market could push the central bank to cut rates more aggressively.
