US Inflation Data Confirms Fed's Trajectory

The US inflation front in July aligned perfectly with market consensus, alleviating uncertainty surrounding the Federal Reserve's policy path and expanding the central bank's realm of predictability.

Deceleration in Inflation Dynamics

According to data from the US Department of Labor, the pace of consumer price increases followed a cautious trajectory, while the decline in energy costs alleviated general pressure.

■The monthly Consumer Price Index (CPI) rose by 0.1% compared to the previous month.

■Annual inflation slowed to 3.4%, meeting market expectations.

■Core CPI, excluding volatile energy and food prices, recorded a monthly increase of 0.2% and an annual rise of 2.5%.

Signals Beneath the Data

When examining the main components of inflation, housing expenditures appear to be following a steady course, while the sharp decline in the energy sector played a balancing role.

■The shelter index rose by 0.1% monthly, constituting approximately two-thirds of total inflation.

■The energy index declined by 1.5% on a monthly basis in July.

■Food prices showed a limited increase, rising 0.1% monthly and 3% annually.

As the data contained no surprises, immediate volatility in swap rates was absent. However, the annual core inflation cooling to 2.5% strengthens the December rate cut scenario while maintaining the 60% probability for a September reduction.