U.S. inflation rose 2.9% in July versus a year ago, which fell below expectations in a result that likely paves the way for the Federal Reserve to finally begin cutting interest rates next month.
A sharp slowdown in the U.S. job market that touched off days of global stock-market turmoil also fueled speculation the Federal Reserve may not wait until its next scheduled meeting.
U.S. job growth slowed more than expected in July, with the unemployment rate increasing 4.3%, leading to fears that the labor market is faltering and the economy is heading for a possible recession.
While maintaining interest rates at their highest point in over 20 years on Wednesday, the Federal Reserve made a suggestion that lower borrowing costs may soon be implemented by policymakers due to slight recent improvements in inflation.
U.S. prices increased moderately in June as the declining cost of goods tempered a rise in the cost of services.
U.S. consumer prices fell for the first time in four years in June amid cheaper gasoline and moderating rents.
The economy grew by 206,000 jobs in June, but unemployment was above 4% in the same month, according to the Labor Department said on Friday.
The Labor Department’s employment report also showed the economy created 111,000 fewer jobs in April and June than previously estimated.
U.S. monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months.
Big U.S. lenders are expected to show they have ample capital to weather any renewed turmoil during this week’s Federal Reserve health checks.