Key Facts
• US core inflation rose as expected in August 2025.
• Weekly jobless claims surged to the highest level since October 2021.
• Markets anticipate a 0.25% rate cut in September and two more cuts this year.
• Northlight Asset Management: “The final barrier to rate cuts has been removed.”
• Reagan Capital: “Inflation is relatively stable, allowing the Fed to focus on labor market softening.”
• Morgan Stanley: “Labor market remains the primary focus despite CPI data.”
• Comerica Wealth Management: “Inflation indicators remain above the Fed’s 2% target but are largely contained.”
• Global X: “Risks to full employment now outweigh inflation risks, supporting small rate cuts.”
• Principal Asset Management: “Surging jobless claims add urgency to the Fed’s decision-making.”
• Fed Chair Powell likely to signal consecutive rate cuts to address labor market concerns.
Summary
In August 2025, US core inflation rose as expected, while jobless claims hit a four-year high. Market experts now anticipate a 0.25% rate cut in September, followed by two additional cuts this year. Analysts highlight a shift in the Federal Reserve’s focus from inflation to labor market conditions. Despite inflation indicators remaining above the 2% target, they appear contained, supporting gradual rate reductions. Fed Chair Jerome Powell is expected to prioritize labor market stability, signaling a series of rate cuts to address economic challenges.
