There is a possibility that the Fed will suspend interest rate hikes in September

US Federal Reserve (Fed) policymakers have received new data showing signs of inflation cooling, and there is a growing possibility that interest rates will remain unchanged at the next September meeting.

According to data released by the Bureau of Labor Statistics on 8/10, the core consumer price index (CPI), which excludes rapidly fluctuating food and energy costs, rose 0.2 percent for 2 consecutive months. The rate of increase over the past two months was the smallest in the past two years. The overall CPI also rose 0.2% in July and 3.2% compared to the same month last year.

Steven Stanley, chief economist at Santander US Capital Markets LLC, said, “The Fed must have been encouraged by the low numbers for the second year in a row. I think the Fed's intention is to skip to September. I'm sure these aren't my last words.”

The Federal Reserve raised the federal funds interest rate from 5.25% to the 5.5% range in July, making it the highest level in the past 22 years. The median of the most recent quarterly forecast of the Federal Reserve officials announced in June showed two more interest rate hikes this year, and the first rate hike was achieved with last month's rate hike.

On 8/7, President Michelle Borman repeated the view that the US central bank might need further interest rate increases in order to completely restore price stability, but Philadelphia Federal Bank President Patrick Harker stated on 8/8 that there is a possibility that the US central bank will continue to remain stable in the future.