US Economics Weekly: Cooling inflation increasingly hard to ignore

Research evidence excerpt

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14 Aug 2026 14:44:54 ET │ 18 pages

US Economics Weekly

Cooling inflation increasingly hard to ignore

CITI'S TAKE

A second consecutive month of soft jobs and inflation data led markets to

significantly reduce the probability of a new Fed hiking cycle. We expect

August data – released just before the September FOMC meeting – to stay

similarly weak, which should all but rule out higher policy rates in coming

months. Chair Warsh’s August 28th speech at Jackson Hole has the potential

to be a dovish market event if Warsh chooses to use it to set up Fed actions

over the remainder of the year. We continue to expect the next Fed policy

action to be a rate cut, with a base case for 25bp cuts in October, December

and January.

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Andrew Hollenhorst AC

Veronica Clark AC