Market participants on Tuesday upped their expectations for interest rate cuts by the Federal Reserve this year after the release of the July consumer price index (CPI) report. The U.S. Bureau of Labor Statistics said core CPI accelerated 3.

The Labor Department’s consumer price index for July showed that the annual pace of inflation remained at 2.7 percent from July 2024. That’s the same as the annual rise reported in June and above April’s post-pandemic low of 2.3 percent, though it was just under economists’ expectations.

U.S. consumer prices increased moderately in July, though rising costs for services such as airline fares and some tariff-sensitive goods like household furniture caused a measure of underlying inflation to post its largest gain in six months.