(The Hill) – Consumer prices rose 0.2 percent in July after two months of stagnation or declines, the Labor Department said Wednesday.
The consumer price index (CPI) also fell by 3 percent to 2.9 percent in July, compared to 3 percent in June.
The latest inflation figures come as the Federal Reserve prepares for long-awaited interest rate cuts ahead of the upcoming election, and in a moment of economic fears as the unemployment rate begins to rise.
Since last July, when the Federal Open Market Committee (FOMC) raised interest rates to 5.25 to 5.5 percent, borrowing costs have remained at a 23-year high.
The committee has voted to keep interest rates in the current range at each subsequent meeting, and hopes that it would vote to ease monetary policy in early 2024 were dashed this spring by a rise in inflation.
But with unemployment rising and forecasts for the actual number of recent jobs created revised downwards, concerns about a possible recession have resurfaced.
After the longest period of unemployment below 4 percent since the 1960s, the unemployment rate jumped to 4.3 percent last month from 4.1 percent in June. This is the highest unemployment rate since October 2021.
Now a majority of interest rate traders expect not one but two cuts when the FOMC meets again in September, according to the CME FedWatch interest rate forecaster.
The September meeting will be the last before the general election. While Fed Chairman Jerome Powell has repeatedly stressed that the central bank is an independent body that makes its decisions based on economic data, not politics, the timing puts Powell in the crosshairs of Democrats and Republicans alike.
Former President Trump appointed Powell in 2017, but clashes with the lifelong Republican arose almost immediately when the Fed began raising interest rates during his first term.
Trump recently announced that he would let Powell finish his term, which ends in 2026. warned The Fed opposed interest rate cuts before the election, which would likely stimulate the economy and drive up stock markets.
“They know they shouldn’t do that,” Trump said in a Bloomberg interview.
On the other side of the aisle, some Democrats accessed on The central bank is expected to cut interest rates because it believes they are exacerbating the affordable housing crisis, driving up consumer credit costs and threatening jobs.
