US consumer prices rose only slightly in July. The data support Commerzbank’s assessment that the Federal Reserve will not raise interest rates further.
In the US, July data confirmed that underlying inflationary pressure is easing. As expected, consumer prices rose by only 0.2% MoM, as in June. The core rate (excluding energy and food), which is important as an indicator of the trend, was also only 0.2%, also as in June.
We expect only a core rate of 0.2% for August as well, as there are signs of an even stronger decline in prices for used cars. Due to the significant increase in the price of gasoline, the headline rate could then be 0.5% to 0.6%, but that would probably just be an outlier.
The data that have been released since the last meeting support a standstill on the part of the US central bank: the labor market has lost further momentum, even if there is by no means any weakness here. Today's inflation figures speak the same language; underlying inflation has eased further. We, therefore, see ourselves confirmed in the view that the Fed has peaked with the rate hike on July 25/26 and that no further rate hikes are to be expected.
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