Fed seen sticking to policy-rate hold, for now, as inflation eases again

Federal Reserve policymakers may feel little fresh urgency to raise interest rates in September after a government report showed inflation cooled for a second straight month in July, but they may take little comfort that policy is tight enough to keep the easing trend going.

The consumer price index rose 3.4% in the 12 months through July, the Bureau of Labor Statistics reported on Wednesday, in line with economist expectations. Excluding the volatile food and energy components, the so-called core consumer price index increased 2.5% in the 12 months through July after climbing 2.6% in June.

Underneath the hood, there were some indications of broadening inflation. A sharp drop in hotel prices — unlikely to be sustained — 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, noted Inflation Insights founder Omair Sharif. Technology prices, driven by demand for artificial intelligence, jumped.