US Inflation Holds Steady at 3.7% as Fed Debate Continues
US inflation remained steady at 3.7% above the Federal Reserve's 2% target for the 65th consecutive month, sparking debate over whether interest rates should be raised or kept unchanged.
The Personal Consumption Expenditures Price Index (PCE) was unchanged from June, despite economists' forecasts of a reading of 3.6%. The index had peaked at 7.2% in June 2022 and had been on a downward trajectory after the steepest Fed rate increases since the 1980s helped to bring it back towards 2%.
The recent decline in inflation has buoyed the arguments of Federal Open Market Committee members who voted to leave rates unchanged, but a growing minority of officials argue that tighter policy is needed given inflation has been above target since February 2021.