Core Inflation Persists Despite Steady CPI, Complicating Fed’s Rate Cut Path
U.S. consumer prices rose 0.2% in July, maintaining a 2.7% annual rate—precisely as markets expected. But beneath the surface, Core CPI tells a more stubborn story: a 0.3% monthly gain pushed the annual figure to 3.1%, defying the Federal Reserve's tightening cycle that began nearly a year ago.
Shelter, healthcare, and transportation costs continue to surge, offsetting energy price declines. This divergence leaves policymakers grappling with whether to proceed with anticipated September rate cuts or confront inflation's lingering grip on key sectors.
The data arrives at a critical juncture for risk assets. Cryptocurrencies, traditionally sensitive to liquidity expectations, now face renewed uncertainty as the Fed's calculus grows more complex.
