July's CPI Insights For The Fed
• The July CPI continues a trend of cooling inflation, making a September rate cut from the Fed highly probable.
• This report may ease internal disagreements, reducing the chances of dissent when the first rate cut happens.
• The debate over a 25 bps vs. 50 bps cut remains unresolved. A 50 bps cut might require worsening labor market conditions.
• A key question for the September FOMC will be how many rate cuts are expected for the rest of the year. The September SEP is unique, as it's calendar-based and will guide policy for the November and December meetings.
