Overview
- The Federal Open Market Committee held the federal funds rate at 3.50%–3.75% after its July meeting but recorded a rare 9–3 split with three officials favoring an immediate 25 basis point increase.
- June consumer prices fell 0.4% month over month while annual headline inflation was 3.5% and core CPI excluding food and energy stood at 2.6%, showing mixed signs of cooling.
- Market measures disagree sharply on the odds of a September 25 basis point increase, with one widely used tool showing about a 55% chance and other pricing near 36%.
- The Fed and the Cleveland Fed have released nowcasts that suggest inflation could reaccelerate, and major banks have warned that renewed Middle East energy disruptions could quickly reverse headline gains.
- The next few reports, especially the August CPI and near-term jobs data, will determine whether policymakers act in September and could affect borrowing costs, mortgage rates, and household budgets.