Fed Fit to Cut Rates as Prices Go Down Small Small

Monterey Park, California – For those wey dey wonder wetin dey happen for our economic system, make we yarn am small. Wholesale prices don surprisingly fall for August, giving Federal Reserve chance to consider cutting interest rates dis month. The report wey come from Bureau of Labor Statistics talk say prices don drop by 0.1% for last month, after dem revise July figures down to 0.7% increase (no be small wahala!). Dem estimate say prices go rise by 0.3%, but na so e go be for market sometimes.

When we check the yearly number, dis headline Producer Price Index (PPI) don show 2.6% gain. Even the core PPI, wey no include all those wahala food and energy prices, still comot 0.1%, despite expectation say e go rise by 0.3%. But when you separate am from food, energy, and trade, you go see 0.3% gain for PPI, wey don grow 2.8% from last year. No wonder stock market don dance small after dis report.

We dey get ready for the Federal Open Market Committee meeting wey go happen next week, where dem go decide wetin go happen with key interest rate. According to futures market, na 100% chance say dem go approve rate cut wey don collect since December 2024. Omo, we dey watch dis PPI report plus consumer price reading wey go drop tomorrow, to see if dem go follow through with the cut.

Pricing for services wey dey important for Fed don drop by 0.2%, na im help reduce wholesale inflation. Trade services don see 1.7% slide for prices, while machinery and vehicle wholesaling don tumble down by 3.9% (e be like say na dem dey chop our money). Goods prices don increase small, just 0.1%, while core prices don rise by 0.3%. Food wey people dey chop don go up by 0.1%, but energy don drop by 0.4% (who dey enjoy this wahala?).

Chris Rupkey, CEO of Fwdbonds yan say inflation shock wey no really cause gbege dey carry markets go higher, as inflation dey slack at producer level. E mean say the tariff wahala no dey show as pressure for prices for now. If matter continue like dis, na so dem go get chance to cut interest rates.

Although inflation still dey higher than the Fed target wey be 2%, dem believe say easing housing and wage pressure go gradually push prices down. E no be small matter as Fed dey resist rate cuts dis year, dem dey monitor President Trump aggressive tariffs against U.S. imports. Tariffs never turn lasting cause of inflation before, but the way Trump dey manage am fit make am different dis time around.

For August, tobacco products wey dey affect tariffs don rise by 2.3%. Something wey we need fit to notice, as portfolio management costs wey contribute to July increase don rise again by 2%. Them don dey push Fed to cut rates, as Trump dey complain say tariffs no dey cause inflation. He dey insist say economy need lower rates to boost growth and ease financing for national debt wey don dey swell like plantain on fire.

But e dey clear say Fed don dey get concern about employment picture even as inflation fears don reduce. One report wey come from BLS don show say economy create plenty jobs more than dem initially report before March 2025. Dis matter fit show say labor market dey suffer, even as Fed officials dey smile dey call am ‘solid’.

Next week Fed meeting go get both rate decision and update on where dem dey see the economy and interest rates dey go in future. We dey wait to see wetin dem go talk!