What Today’s Inflation Numbers Mean for the Stock Market and Your 401(K) and Mortgage

The inflation report, released by the Labor Department on Wednesday, likely seals the case for the Federal Reserve to begin cutting interest rates at its next meeting in September.

Economists will now consider how much the Fed is likely to cut benchmark interest rates.

Goldman Sachs Asset Management’s Lindsay Rosner said the data “paved the way” for a quarter-point rate cut by the Fed in September, “though it did not completely close the door” on a half-point cut.

Interest rates have remained at a 23-year high of 5.25 percent to 5.5 percent since July 2023.

Consumer prices rose 2.9 percent from a year earlier in July.

This is the first time that headline inflation, measured on an annual basis, has fallen below 3 percent since March 2021.

Economists polled by Dow Jones had expected a 3 percent increase.

On a monthly basis, prices rose 0.2 percent, in line with expectations.