Trump manages to lower inflation in the U.S. and strengthens expectations of rate cuts

Inflation in the United States recorded a monthly increase of 0.2% in July, below June's 0.3%, in a context where Donald Trump's administration is promoting measures to lower the cost of living.

The data, reported by the Bureau of Labor Statistics (BLS), also positively surprised the markets, which raised the probability of the Federal Reserve (Fed) cutting interest rates in September to 90%.

On a year-over-year basis, the Consumer Price Index (CPI) stood at 2.7%, below analysts' expectations. The overall figure reflects a slowdown in the pace of increases.

Trump and the pressure to lower rates

Trump's administration has maintained a clear stance: cool inflationary pressures to give the Fed room to reduce the cost of credit.

XTB analysts highlighted that the effects of the current economic policy could deepen in the coming months, boosting consumption and investment without causing an acceleration in inflation.

Sectors with more and less price pressure

The BLS report detailed that housing and food grew by 0.2% in July, while sectors such as medical care, airfares, recreation, and used vehicles saw more significant increases. In contrast, lodging away from home and communication registered declines.

On an annual basis, energy prices fell by 1.6%, while food prices rose by 2.9%. These figures show relief for consumers, in line with Trump administration policies aimed at sustaining purchasing power.

With lower monthly inflation and the expectation that the Fed will cut rates in September, Trump adds a key economic achievement to his administration, reinforcing the confidence of markets and the electorate.