Although the 0.4% m/m rise in the all-items CPI was slightly stronger than expected, our estimates still point to a target-consistent 0.18% m/m gain in the core PCE deflator last month. That cements the case for a 25bp cut next week, rather than providing any support for a larger 50bp move. The jump in initial jobless claims to 263,000 last week might appear to support the larger cut, but that mostly reflects seasonal noise around the Labor Day holiday.
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