U.S. consumer price data for July is expected to show some moderation in the torrid pace of inflation in June and, while Wall Street might like it, the data is not expected to be encouraging for the Federal Reserve. The consumer price index is expected to moderate to an 0.2% increase in July when the report is released Wednesday morning, down sharply from a 1.3% gain in the prior month. Lower prices at the gasoline pump are going to push the headline inflation rate lower.
See: Why are gas prices falling? National average below $4 a gallon for first time since March: GasBuddy As a result, headline inflation over the past year will drop slightly to an 8.7% rate compared with the 41-year high of 9.1% in June. But in the big scheme of things, an annual inflation rate above 8% will be “cold comfort to the FOMC,” said Richard Moody, chief economist at Regions Financial Corp., in a note to clients. Opinion: CPI and other data this week pivotal for Fed policy The central bank will also focus more on the details of the report, and are likely to be disappointed, said Omair Sharif, the founder and president of Inflation Insights. Following the Fed policy meeting last month, markets seem to expect the Fed will pivot and will soon start to cut interest rates as economic growth slows. The yield on the 10-year Treasury note
has dropped to 2.78% from 3.03% in mid-July. Fed officials have been pushing back on that notion, said Matthew Luzzetti, chief U.S. economist at Deutsche Bank, in a note to …