With the cooling inflation trend intact, the Fed will cut rates by 25BP in September

“July's U.S. CPI report was not as favorable to cooling inflation as June's, but that report set a very high bar,” said David Doyle, economist at Macquarie Group. “Overall, July's report provides more evidence that the trend of cooling inflation remains intact. It should provide the Fed with more evidence that the potential inflation warming seen in the first quarter of 2024 was temporary and has reversed.” “There is nothing here to stop the Fed from cutting rates in September. The pace of the rate cut will depend heavily on upcoming data releases, with inflation and employment data being particularly important. Our benchmark for a September rate cut is 25 basis points.