US Economic Weekly: Cooling inflation will keep the Fed on hold

Research evidence excerpt

US Economic Weekly: Cooling inflation will keep the Fed on hold

Nomura | US Economic Weekly 17 July 2026

pressures in consumer electronics remained contained despite semiconductor shortages.

Several tariff-sensitive categories, including household appliances and footwear, declined

(Fig.4), while medical care goods fell for the sixth consecutive month.

Fig. 3: CPI core goods inflation remained negative as expected Fig. 4: More than half of tariff-sensitive CPI components

Decomposition of m-o-m core CPI goods inflation declined in June

The share of tariff-sensitive core goods components which increased in each

month

Source: BLS, Haver, Nomura

Note: This figure shows the share of CPI components increasing in each month among

21 most tariff-sensitive components such as new vehicles, luggage, appliances,

footwear, clothing and musical instruments.

PPI data were mixed. Financial services inflation surprised to the downside, while

healthcare and transportation services were firmer than expected. Overall, the net impact

on our core PCE forecast was limited.

Looking ahead, we expect easing tariff effects and residual seasonality to keep core PCE

inflation on a gradual disinflationary path (Fig.5 & 6). We continue to expect y-o-y core

PCE inflation to moderate to 3.2% by year-end under the current methodology (planned

methodologicalchanges could lower it further to around 3.0%). A 0.2% monthly core PCE

print would represent further progress toward the Fed’s inflation objective and should

reduce the likelihood of rate hikes in the near term.

Fig. 5: Core PCE inflation likely moderated sharply to 0.175% Fig. 6: M-o-M core PCE inflation tends to be weigned down by

m-o-m in June negative residual seasonality in the second half of the year