Finance Desk – The US stock market moved closer to record highs on Tuesday after new data showed that inflation in July was slightly lower than expected. This has fueled hopes that the Federal Reserve may cut interest rates in September.
Lower interest rates would make it cheaper for people and businesses to borrow money for things like homes, cars, and equipment something President Donald Trump has been pushing for. He has repeatedly criticised Fed Chair Jerome Powell for delaying rate cuts.
The Federal Reserve, however, has been cautious, concerned that Trump’s tariffs could push prices higher.
On Tuesday, the S&P 500 rose 1.1%, nearly breaking its record from two weeks ago. The Dow Jones gained 473 points (1.1%) and the Nasdaq was up 1.3%, also close to its record high.
Inflation data showed prices were 2.7% higher than a year ago, the same as in June and slightly below economists’ 2.8% forecast. This has increased expectations that the Fed might approve its first rate cut of the year next month.
The Fed will review one more inflation report and jobs data before its September meeting. The last jobs report was weaker than expected, which could also influence the decision.
While some experts say the upcoming data could still change the Fed’s stance, others believe this latest inflation figure gives room to focus on supporting the job market.
Meanwhile, Trump renewed his attacks on Powell, calling him “Jerome ‘Too Late’ Powell” and claiming that delays in cutting rates have caused “incalculable” damage. He also hinted at a possible lawsuit against Powell over what he called mismanagement of a costly Fed building project.
