Overview
- The Bureau of Labor Statistics reported on July 14 that headline consumer prices fell 0.4% month‑over‑month, bringing year‑over‑year CPI to 3.5% and core CPI to 2.6%.
- Markets immediately repriced policy expectations with traders slashing the probability of a July rate increase to roughly the mid‑teens and pushing stocks and cryptocurrencies higher while two‑year Treasury yields fell.
- Fed Chair Kevin Warsh used his first congressional testimony to warn against complacency and say the Fed has no tolerance for persistently high inflation, and other senior officials said one month of cooling is insufficient to conclude inflation is on a durable path down.
- The Fed’s Beige Book noted price growth was the same or slower across districts, but rising oil prices tied to renewed U.S.‑Iran hostilities and Strait of Hormuz tensions remain a clear upside risk that could reverse the recent disinflation.
- Policymakers will weigh incoming wholesale and PCE inflation data and regional reports before the July 28–29 FOMC meeting, with the outcome set to affect borrowing costs for consumers and businesses and the outlook for markets over the rest of the year.