Inflation remained cool in July, based on the Personal Consumption Expenditures index, keeping the Federal Reserve on track for rate cuts.The New York Times reports that inflation remained stable in July, based on the Personal Consumption Expenditures index, which is the Federal Reserve’s preferred measure of inflation. This data suggests that the Fed will continue with its plan to cut interest rates.

The latest data released on Friday showed that consumer spending was strong and inflation was at 2.5 percent on a yearly basis, in line with economist forecasts. The core index, which excludes volatile food and fuel prices, also increased by 2.6 percent from the previous year, indicating a gradual moderation in inflation.

While the yearly inflation rate is still above the Fed’s 2 percent target, it has significantly decreased from its peak of over 7 percent in 2022. This suggests that the Fed’s efforts to cool down inflation are working.

The monthly inflation numbers will be closely monitored by both Fed officials and Wall Street analysts. Inflation increased slightly from June to July, with both the headline and core measures rising by 0.2 percent. However, this is expected due to the comparison with last year’s cool readings.

This is the last P.C.E. report that the Fed will receive before its September policy meeting, where they are expected to announce a rate cut. However, officials will also receive a Consumer Price Index report on September 11, which will feed into the P.C.E. report.

Overall, the data suggests that inflation remains under control and the Fed is on track to lower interest rates next month. If you are having trouble accessing the article, please enable JavaScript in your browser settings or subscribe to The New York Times for full access. 

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