US inflation data released on Tuesday suggests that the Federal Open Market Committee (FOMC) may be able to breathe a sigh of relief, with headline inflation rates unchanged at 2.7% year-over-year and core inflation at 3.1%. The Bureau of Labor Statistics reported a 0.2% month-on-month increase in the Consumer Price Index (CPI), with shelter costs rising by the same amount. Energy prices fell 1.1%, while gasoline costs dropped 2.2%.
Analysts see this data as a positive sign for rate cuts, with many expecting a September meeting to be the next opportunity for the FOMC to adjust interest rates. However, experts caution that sticky service costs and potential tariff impacts could limit further easing in 2025.
Market reaction was initially favorable, with stocks rising on the news. Yet, Fed officials are likely to maintain their focus on upcoming jobs reports before committing to additional cuts.
Some analysts see July’s inflation report as another tick in the box for a cut at the FOMC’s next meeting in September. Seema Shah notes that while tariff pass-through to consumer prices is present, it remains “not significant enough to ring alarm bells.”
Source: https://fortune.com/2025/08/12/jerome-powell-fed-rate-cut-july-cpi-inflation-unemployment