The Federal Reserve can now clearly burn itself the looming victory over inflation into an asset. The recent data by the U.S. Bureau of Labor Statistics’ on CPI (consumer price index) contains its annual indication at 2.7% on August 12, which matches its level in June exactly. Wall Street expert estimates suggested some faster pace of 2.8%. On a monthly basis, the CPI only rose by a modest 0.2%, which was slower than 0.3% in June. Thus, month-on-month inflationary pressure for the end consumer, if we multiply this 0.2% rate by 12 months, does not go beyond 2.4% in total. This level of 2.4% already corresponds to the annual figure shown during a three-month period from April to June, and apparently, the CPI statistics will return to this 2.4% station soon.

The S&P 500 immediately soared by 0.85% to touch and retest its historical highs' area above 6,430 to keep the mid-term rally stage in play. The tech-heavy NASDAQ Composite already surpassed its all-time high by 150 points in the first half hour to follow the CPI release. It is now set above 21,600, and is unlikely to be stopped somewhere on the way to its first power point of 22,000. That corresponds to 23,775 for the USTech100, a select index for a group of largest companies on Nasdaq, keeping 25,000 and then 27,500 further in mind. The U.S. Dollar Index against a basket of other reserve currencies has acquired a very distinct negative momentum, so far limited within a 0.5% slide, but more speculative deals until the end of August may promise more profit in the bearish bet here for the Greenback short-term. A test of at least 95.50 support for USD seems inevitable over time as well as the continuing Wall Street climb. The extension of no extra tariff trade pass for China by U.S. president Trump for another 90 days will add much to the bullish pattern for stocks.

A 73,000 jobs in the Nonfarm payroll report on August 1, with as much as 258,000 downward revision to June and July numbers already led to a nearly 80% bets for the Fed's rate cut two times in a row, in September and December. If we take into consideration today's weak CPI data, then the coming Fed's gathering on September 17. CME FedWatch tool shows this chance is approaching 95%. The market also estimates the chance of a bold 0.5% reduction in borrowing costs by December at only 40%, while more than 50% of traders expect a 0.75% rate cut. In fact, this means either two cuts of 0.25%, or one of 0.25% plus one of 0.5%. The second scenario sounds extreme, however. Anyway, the Fed has nowhere else to go. They will simply have to bite the bullet and cut rates, otherwise they will be the ones to blame for the slowdown in the economy or for the stock market fall which could be provoked if the regulator's steps would not match at all the crowd's expectations which are clearly formed. Again, any future heads of the Fed to replace Jerome Powell are unlikely to want to ruin their odds by voting against rate cuts while waiting for a possible appointment next spring.

Fed's chair Jerome Powell and his colleagues will, of course, say that they achieved this by keeping interest rates high to keep price pressure in check, even though inflation has been more likely restricted due to natural economic causes as well as slowing consumer spending. The Fed will now have a harder time in terms of further insisting on elevated rates drug for the imaginary economic stability, since the central bankers' endlessly vocal worries that Trump's tariff wars might fuel inflation have proven unfounded. While they won't admit it, they will stand there in anti-inflation victory laps whether they are its architects or not. In the end, the reason for Fed's future actions is not so important. What actually matters is only that the already stagnating or probably even cooling labour market, now combined with declining consumer price indicators, give them reason to launch the rate cut cycle with their heads held high. The Fed's new dovish stance could be carved in granite as early as the Jackson Hole policy symposium, scheduled on August 21-23.