The Fed Should Cut Rates Now. Sadly, It Won’t.
A stellar CPI report Thursday confirms that inflation is just about slayed. Now, policymakers need to think about the labor market.
With high inflation in the past, employment should be the focus.
Photographer: Justin Sullivan/Getty Images
Thursday’s wildly encouraging consumer price index report shows that the Federal Reserve should be cutting policy rates at its meeting later this month. Unfortunately, they’ll probably keep us waiting until September.
On the inflation front, just about everything seems to be going right. CPI fell 0.1% in June from the previous month and was up just 3% from the same period a year earlier. Primary rents and owners equivalent rent — the heavily weighted and inertial housing categories that have bedeviled the Fed for two years — are finally cooling on what looks to be a sustainable basis. And used car prices are still falling like stones.