[Music] The Federal Reserve is aiming for 2% Inflation to ensure price stability and Long-term economic prosperity in August The Consumer Price Index grew at an Annual rate of 25% inflation that's slightly above the Target but down from 2.9% in July and Below economists expectations since this Time last year gasoline Prices have fallen by nearly 12% the Energy Information Administration says The average of a price uh average price Of a regular gallon of gas in August was $3.39 triaa reports the current price is Even lower at $3.25 short-term inflation the change in Prices over a month was up 2% last month In part due to high food and housing Costs a sign that the FED might Interpret as evidence of lingering inl Aary pressures which might make an Expected rate cut smaller than expected For more on this I want to bring in Martin backer Dax he is a senior editor And chief markets correspondent for the Financial news site the street Martin It's good to be with you again the Federal Reserve is prepared according to Its chair uh to begin cutting interest Rates next week as the US approaches This 2% goal how do you think they read These Numbers it's interesting isn't it John
Because we're seeing some stickiness in The various measurements that the FED Tries to use to sort of read the path of Of price pressures going into the timate And Beyond um you talk about that Headline rate to 2.5% it is getting Close to the fed's Target but when we Start to strip away some of the more Volatile components and we look at core Underlying prices they're still Stubbornly high we're seeing them in Shelter um we're seeing them in things Like insurance and daycare and all sorts Of other expenses that can't really be Avoided so I think to some degree the FED is going to be a little bit Frustrated by that and as a result They're probably likely to take their Path of interest rate cuts a lot more Patiently now that might test the Patients of Wall Street um because They've been looking for movement from The FED for a number of months now they Will get it next week in Washington they Just won't get as much and they may have To wait longer for the ultimate Destination so I help people understand That the market is looking at these Numbers and saying huh the FED seeing The stickiness in inflation might just Tweak rates down a quarter percent Rather than 50% is that the thinking and And if that's the thinking what do the What does the market then think will
Happen to economic activity well that's Precisely right John I think at the Moment you have sort of a a a split Discussion you have those who would like To see the FED move faster maybe even Cut interest rates by about a half a Percentage point in order to get in Front of what people think will be Economic weakness going forward there Are other people who say If the Fed were To make that decision they might be Seeing things on the economic Horizon That we are not and that could induce Some lack of confidence that's exactly What the market doesn't need at this Point because there's so much Uncertainty out there already so it is a Bit of a knife edge but I think you've Placed it really well in the sense that Wall Street is looking for support from The FED it's going to get it it just may Take a little bit longer what else are You watching Martin or or should anybody Be watching in terms of whether the FED Is able to achieve the so-called soft Landing outside of inflation what else Might be worth keeping an eye on well Chairman Jerome po made a keynote Address at the annual Retreat that they Have in Jackson Hall Wyoming sounds like Quite a nice Gathering I must say and They do it every year and it's a chance For them to be a little bit wonkish in Terms of policy but his keynote
Addresses something we all pay very much Attention to and he talked about the Fact that the fed's twin mandate one of Them is about price stability but the Other is about full employment is coming Into better balance so the FED is Looking at the job market with a lot More clarity than Maybe it did in the Past and as a result Wall Street is very Much focused on job market activity Particularly things like weekly Unemployment claims um sentiment Indicators from the Federation for Independent businesses and many others If we see a Slowdown in the job market And there was evidence of that in the August numbers then the FED will be Minded to move perhaps a bit more Quickly because not only will that mean Slower inflation going forward Unfortunately it could mean a cooling Broader economy into the awesome months But but John it has to be said the Economy is holding up incredibly well The last assessment from the Atlanta fed Said the economy is ticking over at a 2 And a half percent clipped that is Really firm growth heading into the Autumn much higher than people would Have imagined and nowhere near Recessionary territory at this point
