Fed Set to Hold Rates Steady Amid Cooled Inflation

The US Federal Reserve is expected to keep interest rates unchanged at its September meeting after recent inflation data showed prices cooled on a year-over-year basis for the second straight month. The Consumer Price Index rose 3.4 percent in the 12 months through July, down from 3.5 percent in June.

Economists' expectations were met with this data, but it may not be enough to ease the trend of monetary policy tightening. A sharp drop in hotel prices drove much of the month-over-month easing in core inflation, and there were more categories of core goods that saw prices increasing than in June.

However, technology prices jumped due to demand for artificial intelligence, while gasoline prices fell, pushing down on overall inflation. Global fuel prices rose again this month as hostilities in the US-Iran war simmered.

Fed policymakers voted 9-3 last month to leave the benchmark interest rate in the 3.50 percent-3.75 percent range. The three dissenters at that meeting and a couple of other Fed regional bank presidents have made the case for a rate hike given still-too-high inflation.