Inflation Holds Steady at 3.7% in July, Raising Rate Hike Expectations

The US inflation rate held steady at 3.7% in July, unchanged from June and above the Federal Reserve's 2% target for the 65th consecutive month.

This news is likely to intensify the debate among Fed officials over whether interest rates should be raised or kept steady. The Personal Consumption Expenditures Price Index (PCE) increased by 3.7% in the 12 months through July, matching economists' forecasts of 3.6%, but exceeding their prediction for a month-over-month increase of 0.1%.

Excluding energy and food prices, core PCE remained steady at 3.3% on an annual basis while rising to 0.2% in July from 0.1% in June. This modest lift has boosted expectations that the Fed may raise interest rates as soon as next month.