Next week, new U.S. inflation data will be released, potentially influencing the Federal Reserve's (Fed) decisions on interest rates.
Expected Inflation Data
The core personal consumption expenditures price index, excluding the volatile food and energy sectors, is expected to rise by 0.2% in July. This will be the second consecutive month of a 0.2% increase. The annualized three-month core inflation rate is predicted to be 2.1%, which is close to the Fed's 2% target.
The Role of Consumer Spending
Consumer spending in July is forecasted to rise by 0.5%, marking the strongest gain in four months. The level of consumer spending is crucial for the Fed, as it indicates ongoing economic growth despite efforts to reduce inflation.
Fed's Plans for the Future
At the Jackson Hole symposium, Fed Chair Jerome Powell stated that he is now confident in the current inflation trends. He also emphasized the importance of assessing the labor market situation to ensure stable economic growth. The Fed is planning its first formal review since the pandemic-induced inflation spike.
Economists predict that the new inflation data could be a decisive factor for the Fed in making interest rate cut decisions, especially considering the current consumer spending figures and labor market conditions.
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