Federal Reserve's Favorite Inflation Indicator Increased 0.2% In July

The Federal Reserve's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, showed a 0.2% increase in July , matching Wall Street's expectations. The PCE index, which excludes the cost of food and energy, also showed a 0.2% increase in June. On a year-over-year basis, prices rose 2.6% in July, mirroring June's annual increase and falling slightly short of analysts' expectations for a 2.7% increase.

The July inflation data is the first to be released since Federal Reserve Chair Jerome Powell signaled a likely rate cut in the coming months . In a speech in Jackson Hole, Wyoming, Powell stated that the "time has come for policy to adjust" and expressed growing confidence that inflation is moving towards the Fed's 2% target.

According to Yahoo Finance , Nationwide senior economist Ben Ayers noted that the cooling inflation could provide the Federal Reserve with more flexibility to implement aggressive rate cuts in future meetings, particularly if the labor market shows significant deterioration. As of Friday morning, markets were pricing in a roughly 33% chance that the Central Bank will cut interest rates by 50 basis points by the end of its September meeting.