US Inflation Cools Further, Reducing Rate-Hike Expectations

The latest US inflation data provided some relief for financial markets this week, as both consumer and producer price pressures showed signs of moderation.

CPI inflation cooled slightly to 3.4% year-on-year in July, down from 3.5% in June and exactly in line with market expectations.

The core CPI, which excludes food and energy prices, eased to 2.5% from 2.6% previously, indicating that inflation is continuing to cool rather than accelerate.

The Federal Reserve's 2% target remains elusive, but the combination of softer CPI readings and a weakening labor market has reduced expectations for another rate hike in September.