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July CPI meets expectations, the possibility of interest rate cuts in September increases significantly.
On August 12, Guy Lebas, Chief Fixed Income Strategist at Janney Montgomery Scott, stated that the July CPI was roughly in line with expectations, and did not transmit too much of the tariff impact to consumer prices, which certainly supports the possibility of a rate cut in September. There is still some time before next month's meeting, but at least from the perspective of inflation data, the current situation is not concerning. As an independent and impartial economist, one can interpret this data in two ways: first, that the effects of tariffs have not fully manifested yet, and inflation may rise in the future; second, that corporations are absorbing the tariff impact, and therefore it will not transmit to consumer inflation. However, in either case, it is enough for the Fed to have a rationale for cutting rates in September, provided that next month's data does not show a significant acceleration.