The data suggest nominal spending and wage growth are stable, and easing policy too quickly could risk reigniting price pressures.
Shelter and energy costs led the deceleration. While inflation remains above the Fed's target, the monthly price growth neared a multi-year low.
Labor markets are stabilizing and inflation has leveled off. Further easing would've risked recent progress toward price stability.
Headline and core inflation both cooled over the past two months, led by softening energy costs. Missing data complicates projections.
Powell’s remarks highlighted the inherent difficulty of balancing inflation and employment under the Fed's current dual mandate.
Inflation remains stubbornly high and employment is softening. The Fed's "balanced approach" marginally lowered interest rates again.
Modest cooling in consumer prices masks deeper pressures from tariffs and energy costs. The Fed must weigh short-term relief against the risk of tightening too late.
From Eccles to Greenspan to Yellen, history suggests politically seasoned Fed officials are the rule rather than the exception.
Inflation is rising compared to its year-over-year pace, nudged along by tariff effects. But Fed officials are expected to cut rates next week, anyway.
Ninety years later, every Fed decision — from raising rates to curb inflation to cutting them in a downturn — still flows through the framework created in 1935.