The latest inflation reading and what to expect at the Fed.

For Marketplace, I'm Nova Saffo, and for David Brancaccio. The July reading of the Federal

Reserve's preferred inflation gauge came in this morning as expected. The PCE price index from

the Bureau of Economic Analysis rose two-tenths of a percent month over month. Core inflation, which

strips out volatile categories and can give a better read of where prices are headed, ticked up

slightly to an annual rate of 2.9 percent. Joining me now is Christopher Lowe, chief economist at

FHN Financial in New York. Good morning. Good morning, no. So the Fed is going to look at this PCE report and conclude

what? Well, you know, we heard from another Fed voter last night, Chris Waller, one of the governors.

Of course, he's one who've also dissented in favor of cutting in July. But Waller said he

continues to support a quarter point cut in September.

He does not yet favor jumbo cut, as he put it.

But he said he might if the data between now and then come in that way.

In the meantime, though, the case he made is similar to the one we heard from Jay Powell at Jackson Hole. And that is, as long as

the data come in as expected, like today's, then the Fed probably should adjust rates soon.

And Mark, it's pretty much expecting that. We're seeing mortgage rates moving lower to a 10-month

low. So a done deal, September? You know, it's priced in in futures at about an

85% probability, so that's pretty convincing. The move in mortgage rates, I think, more important

because that reflects longer yields, 10-year bond yields coming down. That's what mortgage is

priced off of.

And that means not only that the market expects a cut, but that the market concludes a cut is justified, which, of course, is really important, given the political environment

surrounding the Fed right now.

Christopher Lowe, Chief Economist at FHN Financial in New York.

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