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Lower-than-expected US inflation sparks optimism for possible September rate cut


Former President Donald Trump has put inflation at the forefront of the presidential election discussion, blaming the Biden administration’s energy policies for the rising prices. However, recent data shows that year-over-year US inflation reached its lowest level in more than three years in July, indicating that the worst price spike in four decades may be fading. With prices rising by 2.9% in July, down from 3% in June, there is hope that the Federal Reserve may cut interest rates in September.

Vice President Kamala Harris has announced plans to introduce new proposals to reduce costs and boost the overall economy. While grocery prices showed a slow increase in July, some food prices continue to rise faster than before the pandemic. Gas prices remained unchanged from June to July, showing a decrease from a year ago. Additionally, core inflation excluding food and energy costs slowed to 3.2% from 3.3% the previous month.

The Federal Reserve is closely monitoring these trends and is looking for evidence of slowing inflation before considering a rate cut. Economists expect the first rate cut to occur in mid-September, which could benefit consumers and businesses by reducing borrowing costs. As inflation continues to decline and consumers become more price-sensitive, companies are adjusting prices accordingly.

Overall, with inflation easing and the job market being closely watched, the Fed’s goals remain to keep prices stable and support maximum employment. Analysts anticipate rate cuts at the Fed’s upcoming meetings in light of recent economic data, with retail sales expected to show consumer spending increase modestly in July. As long as shoppers continue to spend, businesses are likely to retain workers and potentially add staff.

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Photo credit www.euronews.com

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