The US consumer prices barely increased in August. Nevertheless, rising rents and healthcare costs showed to some stability in underlying inflation. This could result to making the Federal Reserve more comfortable in reducing its monthly bond purchases.
On Tuesday, the US Labor Department report showed that inflation was largely under wraps. However, some details suggested a decrease in prices earlier this year.
Deutsche Bank Securities chief economist Joseph LaVorgna said, "This should give policymakers greater confidence that the inflation soft patch in the first half was indeed transitory. As a result, some fence-sitting participants may feel marginally more comfortable proceeding with a mini-taper of quantitative easing."
A meeting was held by US Federal officials last Tuesday and Wednesday to deliberate on stimulus and bond buying reduction. By the end of the meeting, many economists had expected the US Central Bank to announce reduction on its USD85 billion bonds purchases every month.
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