Annual inflation in the US fell to 2.9% in July, down from 3%, according to official data released on Wednesday.
The announcement helps pave the way for the US Federal Reserve for cut interest rates next month.
This matters to monetary policy makers in the EU and UK as they don’t like to be too misaligned with the US – for fear of impacting currency strength, among other reasons.
The annual consumer prices index (CPI) rate for July was the lowest since March 2021 and came in below market expectations.
In the immediate aftermath of the publication of the latest figures, financial markets upped their expectations that the Fed would cut interest rates by 0.25 percentage points, pricing in the likelihood of such an outcome at 60.5%.
The likelihood of a bigger 0.5 percentage point cut was judged to be 39.5%.
Earlier in the day, the likelihood of a 0.25 or 0.5 percentage point cut had been almost 50-50.
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