US Inflation Rises 2.9% August, Fed Expected to Cut Rates

August's US Consumer Price Index (CPI) rose 2.9% year-over-year, slightly higher than July's 2.7%, with core inflation steady at 3.1%, reflecting ongoing inflationary pressures partly attributed to President Donald Trump's tariffs and restrictive policies. The month-over-month CPI increase of 0.4% exceeded expectations and was driven largely by rising shelter and food costs, including notable price hikes in groceries such as fruits, vegetables, and meats. Despite this inflation uptick, the labor market showed signs of weakening, with initial jobless claims rising to their highest level since 2021, signaling economic fragility. These mixed signals have not deterred market expectations for the Federal Reserve to implement a 25 basis point interest rate cut at its September 17 meeting, with some speculation about additional cuts later in the year. The rate cut is anticipated to lower borrowing costs and boost liquidity, although crypto markets reacted with a modest pullback following the inflation data release. Overall, the data suggest that while inflation remains a concern, the Fed is poised to ease monetary policy to support the economy amid emerging signs of stagnation.