Inflation Meets Estimates, Rate Cut Still Likely

[Derek Brickley]

Inflation Meets Estimates, Rate Cut Still Likely
Week of August 25, 2025

Hey everyone,

Last week’s inflation report didn’t shake anything up — and that’s actually a good thing. Here’s what you need to know:

📉 Inflation in Check, Rate Cut Still on the Table

July’s PCE report came in right on target: 0.2% monthly and 2.6% annually. Core PCE (the Fed’s preferred inflation gauge) rose 0.3% on the month, 2.9% year-over-year.

👉 What it means: Inflation isn’t spiking — and that gives the Fed more room to cut rates soon. All eyes now turn to the August jobs report on Sept 5 to see if momentum keeps shifting.

🏠 New + Existing Home Sales Dip, But Prices Still Higher Than Last Year

• New home sales: Down slightly in July to a 652K annual pace — but better than expected. Inventory looks high, but most homes aren’t move-in ready yet.

• Home prices: Still rising year over year (+1.9% per Case-Shiller, +2.6% per FHFA), but the growth is cooling. Lower mortgage rates could bring more demand back.

• Pending home sales: Down 0.4% month-over-month, up 0.7% from last year. Buyers are still hesitant, but better rates may boost activity soon.

💼 Labor Market Remains a Bit Soft

Unemployment claims are holding steady, but continuing claims are still above 1.9M — signaling slower hiring. The Fed is watching this closely as it weighs its next move.

📅 Coming Up This Week

• Job openings (Wednesday)
• ADP payrolls + Jobless claims (Thursday)
• August Jobs Report (Friday)

Catch you next week,
Derek Brickley
#LoansbyDB