With inflation easing and the labor market cooling, the risks of keeping policy too tight are mounting. The CME Group now puts the implied odds of a September rate cut at 92.2 percent, reflecting growing expectations in the fed funds futures market that the Fed will respond to the softer data.

Inflation is slowly rising, but not surging out of control. That should provide some flexibility for Fed officials to cut interest rates in September if the job market continues to weaken. “Overall, inflation remains well-behaved,

Inflation held steady in July and ran slightly cooler than expected, increasing the odds of a Federal Reserve rate cut next month.