September Rate Cut More Likely After Favorable Inflation Report

• Thursday's release of favorable Consumer Price Index (CPI) numbers has increased the likelihood of a Federal Reserve rate cut in September.
• Traders now estimate an 83% chance of an easing at the Fed's meeting on Sept. 17-18.
• Some Fed observers believe a cut at the Fed's July 30-31 meeting could be possible.

Cooling Inflation

• The core CPI, which eliminates volatile food and energy costs, climbed 3.3% year over year in June.
• This was below expectations and the May level, signaling a gradual easing of inflation.
• Month-over-month core CPI also showed improvement, rising 0.1% compared to 0.2% in May.

Fed's Focus on Labor Market

• Federal Reserve Chairman Jerome Powell has acknowledged a cooling labor market.
• The June unemployment report indicated a slight increase to 4.1%, up from 3.4% last year.
• The Fed anticipates cutting rates as the labor market normalizes, with a focus on both stable prices and maximum employment.