Core US Inflation Eases for Fourth Month, Paving the Way for Fed Rate Cuts

Recent economic data indicates that core inflation in the United States has continued to decline for the fourth consecutive month. This development strengthens expectations of a potential reduction in the Federal Reserve's interest rates in the near future. The sustained trend of decreasing consumer goods prices suggests that inflationary pressures are beginning to abate, allowing economists and analysts to consider a softening of monetary policy.

According to the report released by the Bureau of Labor Statistics, the core Consumer Price Index, excluding food and energy, rose by just 0.2% in July, which is below expectations and confirms the overall trend of slowing inflation. Over the past year, the core price level has increased by only 4.7%, indicating a clear reduction compared to previous peaks when growth rates reached as high as 6.5% and beyond.

Economists predict that in light of declining inflation, the Fed may lower rates to support further economic growth. A decision may be made at the next meeting, which could lead to lower borrowing costs for consumers and businesses, fostering increased consumer demand and investment activity.

Financial markets are already reacting to the new data: company stocks have started to rise, as investors feel more confident about the narratives surrounding economic recovery. Traders are beginning to reassess their expectations regarding the Fed's future actions, which could lead to rate cuts this year if the trend of low inflation continues.

The overall backdrop of the US economy also supports these trends: the unemployment rate remains low, and wage growth shows healthy figures. It's important to note that low rates could restore economic activity, but may also raise additional concerns about overheating the economy in the future.

Thus, the current decrease in core inflation in the US creates certain conditions for potential easing of monetary policy, which would be beneficial for both the economy as a whole and for consumers. The Fed is closely monitoring economic indicators and will act depending on how events unfold in the coming months.

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