US Inflation Rate Eases to 3.4%, Despite No Shift in Fed Rate-Hike Bets

The US inflation rate cooled to 3.4% in July, meeting Wall Street forecasts and easing concerns about severe inflation. Despite this, market participants do not expect a shift in the Federal Reserve's rate-hike bets.

Cheryl Venable, interim president of the Federal Reserve Bank of Atlanta, noted that 'the labor market is largely stable, but inflation remains too high,' with prices influenced by unpredictable geopolitical events such as conflict in the Middle East.

The July Consumer Price Index (CPI) rose 3.4% from a year earlier, down from 4.2% in May and 3.5% in June. The core CPI, excluding volatile food and energy prices, increased by 0.2% from June and 2.5% from last year.

The favorable CPI result did not blunt rate-hike expectations, with the New York market barely changing course after the release. The Standard & Poor's 500 and Nasdaq Composite rose modestly, while the Dow Jones Industrial Average fell slightly.