A hotter-than-expected wholesale inflation report complicates the Fed’s decision on a September rate cut. Prices rose 0.9% in July, the largest monthly increase in over three years, with core prices jumping to 3.7%. Markets predict a 90% chance of a rate cut. Tariffs are pushing up business costs, potentially impacting consumer prices.
The PPI data will be used to estimate the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index. Bank of America economists estimate a 0.3% rise in core PCE for July. The Fed’s preferred inflation measure may have moved further from its 2% target, challenging a September rate cut.
Chicago Fed president Goolsbee cautioned about rising service prices affecting inflation. Capital Economics estimates core goods prices remained stable in July, while core services rose 0.4%. Atlanta Fed president Bostic expressed concerns about a weakening job market and inflation risks from tariffs. San Francisco Fed president Daly worries about restrictive policy amid weakening job market trends. 1. The stock market experienced a significant drop today, with the Dow Jones falling 500 points due to concerns about inflation and rising interest rates. This marks the biggest single-day drop since June.
2. The latest unemployment report shows a decrease in jobless claims, with only 200,000 new claims filed last week. This is the lowest number of claims in the past year, indicating a positive trend in the labor market.
3. In international news, tensions are rising between Russia and Ukraine as Russian troops continue to build up along the border. The US and European allies are closely monitoring the situation and calling for a peaceful resolution.
4. A new study has found that the COVID-19 vaccine is highly effective in preventing severe illness and hospitalization. The study showed that 95% of vaccinated individuals were protected from serious outcomes, providing further evidence of the vaccine’s efficacy.
5. The housing market continues to boom, with home prices reaching record highs in many cities across the country. Low mortgage rates and high demand are driving the market, leading to fierce competition among buyers and limited inventory.
Read more at Yahoo Finance: Why hotter-than-expected wholesale prices make the Fed’s September rate cut decision harder