FED’s Rate Cut Decision: Balancing Growth vs. Inflation

The Federal Reserve (FED) faces a complex dilemma as it weighs its September rate cut decision amidst surging wholesale prices, rising mortgage rates, and increasing political pressure. The latest Producer Price Index (PPI) data reveals a sharp increase of 0.9% in July, signaling potential price hikes for consumers. This fuels concerns that businesses may pass on higher costs, further escalating inflation above the FED’s 2% target. While markets anticipate a rate cut with over 90% certainty, this is complicated by strong inflationary readings.