Goldman Sachs: CPI Data Backs Expectation for Possible “Insurance” Rate Cut by the Fed in September

On August 12, Alexandra Wilson-Elizondo, Co-Chief Investment Officer of Goldman Sachs’ Multi-Asset Solutions, said that July’s CPI data came in line with expectations, with core inflation rising 3.1% year-over-year. She noted that the data supports the Fed’s view that the impact of tariffs on price levels is largely temporary.

So far, tariffs have not driven significant price increases, as companies have been offsetting cost pressures by reducing inventories and adjusting prices cautiously, mindful of consumers’ sensitivity to price changes.

With the Fed’s policy being highly data-dependent, the focus is expected to shift more toward the labor market, especially as inflation remains under control and revised employment data increasingly points to signs of labor market weakness. Overall, the report reinforces market expectations for a potential “insurance” rate cut in September — a move that could become a key driver for markets. #cpi