With inflation easing and the labor market cooling, the risks of keeping policy too tight are mounting. The CME Group now puts the implied odds of a September rate cut at 92.2 percent, reflecting growing expectations in the fed funds futures market that the Fed will respond to the softer data.

While the overall reading on consumer prices was steady, a measure excluding food and energy categories rose to 3.1%.

Inflation is slowly rising, but not surging out of control. That should provide some flexibility for Fed officials to cut interest rates in September if the job market continues to weaken. “Overall, inflation remains well-behaved,

The Bureau of Labor Statistics reported the July consumer price index which showed CPI inflation continued to rise as tariffs push prices higher for U.S. businesses and consumers.

Inflation held steady in July and ran slightly cooler than expected, increasing the odds of a Federal Reserve rate cut next month.

After somewhat positive inflation data in July, the chances of the Federal Reserve cutting interest rates in September are at roughly 83%, according to CME Group 's FedWatch tool calculations on Aug. 18. One month earlier, roughly 59% of traders betting on changes in the federal funds rate thought an interest rate cut would occur in September.

Canada's annual inflation rate eased to 1.7% in July from 1.9% in the prior month as lower year-on-year gasoline prices kept the consumer price index low, but core measures of inflation stayed sticky,

Consumer inflation in Canada rose by less than expected in July, according to Statistics Canada, as falling gasoline prices offset price increases elsewhere.

The producer price index for July suggests companies may be feeling the sting of inflation and consumers could be next.

Japan's core inflation rate in July likely slowed from the previous month but remained above the Bank of Japan's 2% target, a Reuters poll showed, adding to pressure on the central bank to raise interest rates.