Economists expect Thursday’s inflation report to show the fastest consumer price increases since January, but even an uptick is unlikely to deter the Federal Reserve from cutting interest rates at its meeting next week.
The Fed can take some comfort in Wednesday’s datapoint showing that producer prices — the cost of goods before they hit shelves — unexpectedly slowed, which should give companies the room they need to keep retail prices steady going forward.
And policymakers have shifted their emphasis from battling inflation, which demands higher interest rates, to guarding against unemployment, which would justify a widely expected reduction of 0.25 percentage points to baseline borrowing rates, and another two cuts by the end of the year.
