Inflation in the United States for July largely met expectations, setting the stage for the Federal Reserve to potentially lower interest rates at its upcoming mid-September meeting.
The Consumer Price Index (CPI) rose by 0.2% in July, according to a government report released Wednesday. This increase follows a 0.1% decline in June and aligns with expectations for a 0.2% rise. On a year-over-year basis, the CPI increased by 2.9%, slightly below the anticipated 3% and down from 3% in June.
Core CPI, which excludes food and energy costs, also rose by 0.2% in July, matching expectations and up from 0.1% in June. On a year-over-year basis, the core CPI was up by 3.2%, in line with forecasts and a slight decrease from June’s 3.3%.
In response to the inflation data, the price of bitcoin (BTC) showed a modest increase, trading at $61,200 for the day.
The report has little impact on the Federal Reserve’s anticipated decision. Prior to the release, CME FedWatch indicated that there was no chance the Fed would maintain its current benchmark fed funds rate range of 5.25%-5.50%. Instead, the market has priced in a 52.5% chance of a 50 basis point rate cut, compared to a 47.5% likelihood of a 25 basis point reduction.
With this data, market expectations for a rate cut remain unchanged. Investors will next focus on upcoming U.S. macroeconomic reports, including initial jobless claims and retail sales. Additionally, the Federal Reserve’s Jackson Hole Economic Symposium, set to take place before the end of August, may provide further insights into potential policy adjustments, as past Fed chairs have occasionally used the conference to announce or hint at significant changes.
