Inflation eases: The Fed weighs interest rate cuts amidst campaign

The chief economic adviser to the White House, Lael Brainard, stated in a report: "we are closing the chapter on inflation," after the publication of data showing that the Consumer Price Index (CPI) was 2.5 percent in August. Issues related to the economy, especially inflation, are key topics in the ongoing presidential campaign in the USA.

A CPI of 2.5 percent surprised some analysts, who expected a result of 2.6 percent. In July, the index was 2.9 percent, indicating that the current level of CPI inflation is the lowest since 2021, according to the U.S. Department of Labor.

According to a poll conducted for The New York Times, the economy is considered by most Americans to be the most important issue in the campaign.

The latest CPI results show that inflation is behaving as expected by the U.S. Federal Reserve (Fed), which will meet on September 18 at 2:00 PM Eastern Time. Fed Chairman Jerome Powell previously suggested that interest rates might be lowered at the upcoming meeting.

It is not yet clear to what extent interest rates will be lowered, as the Fed makes decisions based on another indicator, partially derived from CPI data but published later.

According to The New York Times, wages have been rising faster than prices for over a year, which could be a point of satisfaction for President Joe Biden's administration, as it has struggled to show economic improvement in the U.S.

The Fed raised interest rates during the COVID-19 pandemic to combat rising prices. Many entrepreneurs are eagerly anticipating a rate cut, as it will enable companies to take out cheaper loans from banks.