"That's because part of the Fed's mandate is to ensure stable and maximum employment, an aspect of their work which in recent months has been overshadowed by the fear of inflation-mainly due to President Trump's tariff plans. On this account, Powell has agreed with many analysts that he will have to "see through" tariff increases as a one-off blip to price stability as opposed to an ongoing trend which will need to be managed."
"Which meant yesterday's Consumer Price Index (CPI) didn't come with the same level of gravity as it may have done otherwise. The BLS reported CPI for urban consumers increased 0.4% on a seasonally adjusted basis, up 0.2% from July. The largest contributor to the increase was shelter, which rose 0.4%, while the food index increased 0.5%, with groceries increasing 0.6% for the month."
Initial jobless claims rose by 27,000 to 263,000 in the week ending September 6, marking the highest level since October 2021. Significant revisions to recent BLS jobs reports painted a weaker employment picture than previously reported. The weaker labor data increased pressure on the Federal Open Market Committee to consider cutting the policy rate as part of its employment mandate. Fed Chair Jerome Powell signaled willingness to "see through" tariff-driven price pressures, treating them as transitory. The Consumer Price Index rose 0.4% in August, led by shelter and food, including a 0.6% jump in groceries. Markets rallied, pricing in an imminent easing cycle.
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