U.S. inflation pressures eased again last month, but the overall softening might not be significant enough to justify an outsized interest-rate cut from the Federal Reserve next month in Washington.
The Commerce Department said its headline Consumer Price Index for the month of July was pegged at an annual rate of 2.9%, the lowest since March 2021 and down from the 3% pace recorded in June.
On a monthly basis, price pressures edged 0.2% higher, thanks in part to a modest 4 cents per gallon increase in domestic gasoline prices,
So-called core inflation, which strips out volatile components like food and energy, slowed to an annual rate of 3.2%, the lowest rate in more three years and matching Wall Street’s 3.2% forecast.
The monthly reading of 0.2% also matched Wall Street forecasts and was up modestly from the final June reading of 0.1%.
Traders work in the S&P options pit at the CBOE Global Markets exchange as Federal Reserve Chairman Jerome Powell prepares to speak on June 12, 2024 in Chicago.
U.S. stock futures nudged modestly lower in the wake of the inflation data, with the S&P 500 called 2 points lower while the Nasdaq was called 30 points to the downside. The Dow Jones Industrial Average, meanwhile, is priced for a 25 point decline.
Benchmark 10-year Treasury note yields rose 2 basis points following the data release to change hands at 3.864% while 2-year notes were pegged 5 basis points higher at 3.981%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.84% lower at 104.171.
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CME Group’s FedWatch now suggests a 52.5% chance of a 50-basis-point (0.5-percentage-point) interest-rate cut from the Fed when it meets next month in Washington. The odds of a 25-basis-point reduction are pegged at 47.5%.
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