The data has a certain negative impact on the economy and the dollar, although the impact is limited. The consumer confidence index, as a forward-looking data, is crucial to the trend of the core personal consumption expenditure (PCE) data in July.
At the FOMC meeting next Thursday, if there is no clear indication of a possible rate cut in September, the July data will be particularly critical, especially the core PCE data. If the data shows stability again, or PCE declines slightly, but mainly due to reduced income and reduced willingness to consume, this will continue to be the focus of the Fed.
It should be noted that although the current inflation data is not the main factor prompting the rate cut, combined with the core PCE data and the labor market situation, they still have a greater impact on the rate cut decision.
How to effectively control wage increases without affecting consumer confidence is a complex challenge. This is also one of the problems that the Fed needs to solve at present.
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