Former Treasury Secretary Steven Mnuchin responded to the former president's speech about Kudlow at the Economic Club of New York.
Inflation fell to its lowest level in more than three years in August, strengthening the case for the Federal Reserve to cut interest rates next week even as prices remain uncomfortably high for millions of Americans.
The Labor Department said on Wednesday that the Consumer Price Index (CPI), a broad measure of the prices of everyday items such as gasoline, groceries and rent, rose 0.2% month-on-month in August, in line with expectations of economists surveyed by LSEG.
Prices rose 2.5% in August compared to the same month a year ago, slightly below LSEG's forecast and down from 2.9% in July. This is the lowest level since February 2021.
So-called core prices, which remove more volatile indicators such as gasoline and food to give a more accurate assessment of the trend in price increases, rose 0.3% month-on-month in August, slightly above LSEG's forecast of 0.2%. The index was unchanged from the previous month, as expected, at 3.2% year-on-year.
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Overall, the report indicates that inflationary pressures in the U.S. economy continue to ease, although prices remain above the Federal Reserve's 2% target.
The announcement of the lower-than-expected inflation rate comes as Federal Reserve policymakers are scheduled to meet at a time when they are likely to cut interest rates amid signs the economy is cooling. After the Fed left interest rates unchanged at a 23-year high of 5.25% to 5.5% in July, Fed Chairman Jerome Powell suggested in a speech at the Jackson Hole conference in August that “the time has come” to cut rates.
“The Fed is widely expected to cut rates by 0.25 percentage point next week, and with the CPI reading today being roughly in line with target, that looks likely,” said Chris Larkin, managing director of trading and investments at Morgan Stanley's E*Trade. “Investors hoping for a bigger rate cut may be disappointed, but with inflation appearing subdued, markets will likely refocus on economic growth, particularly the employment picture.”
This is a developing story, please check back for updates.
