US inflation held steady at 3.7 percent in July, according to the Personal Consumption Expenditures Price Index, keeping price growth well above the Federal Reserve’s 2 percent target for the 65th consecutive month. Core inflation remained at 3.3 percent.
On a monthly basis, prices rose 0.2 percent, above economists’ expectations of 0.1 percent, reinforcing concerns that inflation is proving stickier than policymakers had hoped through the year.
Energy costs have been a primary driver, with gasoline rebounding to around $4.10 a gallon after military action against Iran earlier in the year pushed oil prices higher. The escalating US-Canada tariff dispute could add further pressure.
The data lifted expectations for a Federal Reserve interest-rate increase, with futures pricing in roughly a 42 percent chance of a hike at the September meeting, up from 36 percent beforehand.
For European markets sensitive to US monetary policy, the prospect of higher American rates carries real consequences for currencies, capital flows and the global cost of borrowing.
