US inflation continued to ease in July 2026, with the annual rate at 3.4%, slightly down from 3.5% in June. The core Consumer Price Index rose 0.2% month-over-month, bringing the annual increase to 2.5%. These figures support the view that the Federal Reserve is unlikely to raise interest rates in September. Market participants are increasingly expecting a pause or rate cut, with the Pause-Pause-Pause scenario priced at 50.5% for October. Upcoming FOMC meetings and statements from Jerome Powell will be key in shaping market expectations.
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