Inflation is slowing so much that some economists said it could pave the way for another big Fed rate cut, if other data suggest one is warranted.The New York Times reports that inflation is slowing down significantly, leading some economists to believe that the Federal Reserve may cut interest rates again if other economic data supports it. In August, the Personal Consumption Expenditures index rose by 2.2 percent from the previous year, which is lower than the 2.5 percent increase in July and below economists’ expectations. This is the slowest annual inflation reading since early 2021. The core inflation measure, which excludes volatile food and fuel prices, also showed a slight decrease from the previous month. This data indicates that the Fed’s efforts to control rapid price increases are working.

The Fed has already started to lower interest rates from a high of 5.3 percent, and last week they voted to cut rates by half a percentage point. They also hinted at more rate cuts in the future as long as inflation continues to decrease. Omair Sharif, founder of Inflation Insights, believes that this report provides the evidence the Fed needs to continue lowering interest rates quickly.

The Fed’s decision to cut rates is already having an impact on mortgage rates, and it could potentially prevent the job market from slowing down further. The central bank is aiming for a “soft landing,” where they can control inflation without causing a recession by raising unemployment and damaging the economy. This news may be reassuring for those concerned about the state of the economy. 

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