September 11, 2024 (MLN): US annual inflation rate fell to 2.5% in August, setting the stage for the Federal Reserve to start cutting interest rates at its meeting next week.
CPI came largely in line with market estimates and compares with July's increase of 2.9%.
Meanwhile, core CPI, which excludes volatile food and energy prices held steady at 3.2%, according to data published by the Bureau of Labor Statistics on Wednesday.
On a monthly basis, core prices rose 0.3%, the most in four months, and slightly higher than economists expectations of a 0.2% increase.
Metric
Actual
Estimate
CPI MoM
0.2%
0.2%
CPI YoY
2.5%
2.5%
Core CPI MoM
0.3%
0.2%
Core CPI YoY
3.2%
3.2%
Neil Birrell, chief investment officer at Premier Miton Investors, says the likelihood of a 50 bps cut from the Fed next week has taken a “big knock with this number, but it won’t be enough to stop the Fed cutting at all," Bloomberg reported.
Only five of the 65 forecasts in Bloomberg’s survey called for a 0.3% increase in the core CPI. Almost everyone else was at 0.2%, and four had it at 0.1%.
Stocks wavered and bond yields rose. S&P 500 futures dropped steeply immediately after the report came out, before paring losses. The yield on 10-year Treasuries advanced two basis points to 3.66%. The dollar wavered.
