Summary
United States: Firmer Inflation Tilts the Scales Toward 25
- The core Consumer Price Index rose 0.3% in August, the fastest increase in four months. Soft measures like NFIB price plans continue to signal a downward trend in inflation; however, recent price resiliency may prompt FOMC members to exercise a bit more caution in September.
- Next week: Retail Sales (Tue.), Industrial Production (Tue.), Existing Home Sales (Thu.)
International: European Central Bank Continues Carefully Along Its Rate Cut Path
- The European Central Bank (ECB) cut its Deposit Rate by 25 bps this week to 3.50%, as widely expected. Considering somewhat balanced commentary on economic developments in the policy statement, upwardly revised core inflation forecasts for this year and next, and some hawkish-leaning comments from ECB President Christine Lagarde in the post-meeting press conference, we remain comfortable with our view for the ECB to take a cautious approach to rate cuts.
- Next week: China Retail Sales, Industrial Production (Sat.), Bank of England (Thu.), Bank of Japan (Fri.)
Interest Rate Watch: Let the Easing Begin
- The FOMC is widely expected to kick off the long-awaited easing cycle at its meeting next week. Looking ahead to the September 17-18 meeting, we see three key developments.
Credit Market Insights: Uptick in Consumer Borrowing in July
- Total consumer credit increased $25.45B in July, the most since November 2022. The increase in consumer borrowing over the month shows that the consumer continues to rely on credit to maintain their levels of spending. That said, the trend in borrowing has continued to downshift this year, suggesting that consumers may be feeling the pinch of higher rates.
Topic of the Week: A (Labor) Force to Be Reckoned With
- In celebration of Hispanic Heritage Month, which kicks off this Sunday, we dive into the significant contributions that the Hispanic and Latino community has made to U.S. labor force growth over the past decade.
