US inflation continues to slow, opening the door for Fed rate cuts.

(VOR News) – Considering that prices stopped rising more than expected in June, the inflation Federal Reserve may be able to lower interest rates.

These rates affect many financial goods, such as mortgages and credit card payments. We now have yet another sign that inflation has stopped.

There was a 3% year-over-year rise in the Consumer Price Index in June. This was less than the 3.3% annual rate seen in the previous month. Prices fell by 0.1% from May to June.

This is the first time the monthly number has dropped by a large amount since May 2020, when the epidemic was just starting.

There are more whispers that the Federal Reserve will lower interest rates in September after a report from the Bureau of Labor Statistics on Thursday.

Voters would feel a little better about this before the election in November, which both parties think could be affected by how people feel about the economy.

Before the report came out on Thursday, Federal Reserve Chair Jerome Powell spoke to Congress this week. Before he made any changes, he was aware of the risks that came with keeping interest rates high for a long time. He did say, though, that he wanted to get “more good data” on inflation.

The report that came out on Thursday and was surprisingly strong may be able to do this.

“Core” inflation between May and June.

Which doesn’t include changes in food and energy inflation prices, which rose by just 0.1%, which was the smallest monthly gain since January 2021.

The price of gas went down by 3.8% and the price of used cars went down by 1.5%. It was only a 0.2% rise in the cost of living in June, even though it has been a major cause of rising prices for several months.

At its annual meeting in Jackson Hole, Wyoming, in August, the Federal Reserve may hint at an upcoming policy change. This is true even though it is very unlikely that officials from the Federal Reserve will make any changes to the interest rate when they meet later this month.

The Federal Reserve has been under pressure to lower inflation and interest rates for a while now, even though the job market has been slowly getting worse. At 4.1%, the jobless rate is the highest it has been since the end of the epidemic.

This number hasn’t been seen since February 2018, except for when more jobs are expected to be lost in 2020.

Even though the jobless rate is still at an all-time low, the fact that it has been going up for three months in a row is causing more and more worry, even though many economists have been less worried about a recession since last year.

In a note posted on Substack last week, Guy Berger, director of economic research at the Burning Glass Institute (a research firm that studies how people can move up in the economy), said that the job market has been going down since the spring of 2022 without going into a recession.

“We’re not at the tipping point into recession yet, but I don’t have a lot of confidence about the distance from that tipping point.”

Interest rates are one way that the Federal Reserve can control the rate of inflation economic growth. The federal funds rate is about 5.5% right now, which is the highest it has been since before the 2008 financial crisis. By keeping interest rates high, the Federal Reserve has tried to lower the general demand for borrowing money to buy goods and services.

This has prevented prices from going up too much. In most cases, the higher rates have worked out correctly.

The inflation rate reached 9.1% in June 2022.

Since then, it has dropped significantly, but it has stayed around 3% throughout the year. Powell told Congress this week that people’s views about inflation are still “anchored,” which means there is only a small chance that prices will start to rise again. Furthermore, he said that “modest” work has been made toward the 2% goal.

Economists think that the fact that many customers’ financial situations have gotten worse since the start of the epidemic recovery is a big reason.

As the report is set to come out on Thursday, Sarah House, an economist at Wells Fargo, said in a note released this week that “increasingly cost-conscious consumers are also likely to limit the extent of price increases across the service sector.”

Reason for this is that it is getting harder to keep prices from going up because input costs, especially labor, are going up less quickly.

Some experts and lawmakers on the left say that the Federal Reserve has already put off lowering interest rates for too long. Ian Shepherdson, the Chief Economist at Pantheon Macroeconomics, warned in a recent report that the central bank “will be rushing to stop a major downturn.”

SOURCE | NBC

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