US inflation is growing at its slowest rate in over three years, with prices up just 2.9% in the year to July, according to the Labor Department.
This slowdown in inflation might lead the Federal Reserve to consider lowering interest rates. The increase in prices is the smallest since March 2021 and down from 3% in June.
The Federal Reserve has kept interest rates at 5.3% since July 2023, aiming to control inflation by making borrowing more expensive.
This high rate has affected mortgages, credit cards, and loans. However, with inflation moving closer to the Fed’s 2% target, partly due to lower oil prices and easing supply chain issues, there is growing speculation that the Fed might cut rates soon.
Despite the slower inflation, the cost of some essentials, like housing and groceries, remains high. This has put pressure on the White House, especially with the upcoming presidential election.
The drop in petrol prices and falling costs for items like appliances and cars have been positive signs.
On Wall Street, opinions are split on how much the Fed should cut rates in September. Some analysts think the Fed might act quickly to reduce rates, while others are cautious, noting the recent rise in rents and inflation in the UK.
Overall, the latest inflation report shows progress, but also highlights ongoing challenges with prices for everyday items.
This information comes from a BBC report, which provides insights into the current economic situation and potential Federal Reserve actions.
Credit : BBC
https://www.bbc.com/news/articles/cwy3wy522dyo