CPI data provides "ammunition" to Trump, once again urging Fed Chairman Powell to "cut interest rates immediately"

On Tuesday, President Trump once again criticized Federal Reserve Chairman Powell on social media, demanding an "immediate rate cut" and threatening to allow a "major lawsuit" against Powell to proceed. Trump bluntly stated in his post that Powell is "always too late," causing "incalculable damage," and criticized his management of the renovation project at the Federal Reserve headquarters as "terribly bad," stating that the project, originally budgeted at $50 million, has now skyrocketed to $3 billion. The Federal Reserve has not commented on this, but has previously provided explanations for the rising costs of the renovation project. Trump also emphasized that the tariff policies have brought in trillions of dollars in revenue for the United States, without causing inflation or other economic problems, and pointed out that the majority of the tariff costs are borne by businesses and foreign governments. Earlier today, data released by the US Bureau of Labor Statistics showed that the Consumer Price Index (CPI) rose by 0.2% in July compared to the previous month, and rose by 2.7% year-on-year, in line with market expectations. The core CPI rose by 0.3% month-on-month, the highest since January, and rose by 3.1% year-on-year. However, the quality of inflation data has raised concerns in the market, as some regions in the United States have temporarily suspended CPI data collection due to budget and staff cuts, leading the Bureau of Labor Statistics to use estimates to fill in missing data. Market analysts generally believe that inflation remains in a moderate range, providing policy space for the Federal Reserve to respond to the emerging weakness in the labor market. Karl Schamotta, Chief Market Strategist at Corpay, stated that Powell should include a rate cut in September on the agenda for the upcoming Jackson Hole Symposium. Goldman Sachs, on the other hand, pointed out that the impact of tariffs on prices is mostly temporary, and companies are mitigating cost pressures by cutting inventory and pricing cautiously. CME's "FedWatch" tool shows that the market expects a 90.1% probability of a 25 basis point rate cut by the Federal Reserve in September. Against the backdrop of inflation data meeting expectations, US Treasury yields have fallen, with traders betting that the Federal Reserve still has room for rate cuts in the remaining three meetings this year.