U.S. Inflation Drops to 2.5%
On September 11, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) year-over-year for August had decreased to 2.5%, down from the previous 2.9%.
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On September 11, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) year-over-year for August had decreased to 2.5%, down from the previous 2.9%.
This drop met analysts' expectations, with most predicting the 2.5% figure, as noted by WSJ’s chief economic correspondent Nick Timiraos.
According to Bloomberg, bond market traders are now factoring in the possibility that U.S. inflation could dip below the Federal Reserve’s 2% target. The publication highlights that 10-year breakeven rates have fallen to their lowest closing level since 2021.
All eyes are now on the Federal Reserve’s meeting on September 18, where the decision on the interest rate will be finalized.
The CME FedWatch tool indicates that the Fed is more likely to reduce the interest rate by 25 basis points rather than 50, as was speculated earlier this summer. However, these projections remain fluid and shouldn’t be relied upon for making investment decisions.
Nick Timiraos, chief economic correspondent for WSJ, also leans toward the belief that a 50 basis point rate cut is unlikely, given the housing inflation data.
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