Federal Reserve Prepares for Interest Rate Cuts

The US Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, showed a steady increase of 0.2% for July, maintaining an annual inflation rate of 2.5%. This data supports expectations for potential interest rate cuts at the Fed's upcoming meeting in mid-September, as inflation pressures continue to moderate. While spending rose by 0.5%, concerns linger that this growth is not matched by rising incomes, indicating a potential strain on consumers. Meanwhile, stock markets experienced volatility, with Nvidia's disappointing forecast leading to a 6% drop in its stock despite strong earnings. Analysts are closely watching the labor market for signs of weakness that may influence the Fed's rate-cutting strategy, with the next jobs report being crucial. Overall, the economy appears to be slowing, but at a pace that remains manageable for consumers.