Inflation continues to slow, drawing market attention to the Fed’s path toward rate cuts.
Recent data shows that US inflation is steadily declining toward the Fed’s 2% target range. The cooling of the Consumer Price Index (CPI) is primarily due to stable energy prices and easing supply chain bottlenecks. This trend has reinforced market expectations that the Fed will soon begin a cycle of rate cuts.
However, the Fed remains cautious. Several officials have publicly stated that they need to see more durable evidence to ensure inflation does not resurface. The current strong labor market and continued robust consumer spending provide policymakers with more room to wait and see.
This “higher interest rates for longer” stance continues to impact the daily lives of Americans. High mortgage rates continue to dampen real estate market activity. Meanwhile, high financing costs for credit cards and auto loans are also putting significant pressure on low-income households.
Market analysts generally predict that the Fed is most likely to deliver its first rate cut in September of this year. Future economic data, particularly the employment report and inflation indicators, will be crucial in determining the timing and pace of policy shifts. Companies and investors across the United States are closely watching subsequent developments to adjust their financial and investment strategies.