Fed Keeps Rates Hike on Hold Amid Easing Inflation

Federal Reserve policymakers may feel little urgency to raise interest rates in September following a government report that showed inflation cooled for the second straight month in July.

The consumer price index rose 3.4% in the 12 months through July, matching economist expectations. Excluding food and energy components, core inflation increased 2.5% over the same period after climbing 2.6% in June.

Inflation Insights founder Omair Sharif noted that technology prices jumped due to demand for artificial intelligence, while hotel prices dropped sharply, a trend unlikely to be sustained.

The Fed's preferred measure of underlying inflation is estimated to remain at 3%, despite the recent easing in CPI. Chairman Kevin Warsh has not specified what would prompt a change in policy rates, leaving investors to listen to his colleagues' views on the outlook.