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

The CME Group’s FedWatch Tool places the chance of a .25 rate cut in September at 86.4%. If this week’s July CPI report comes above the June pace of 2.72% year over year, the cost of essentials like groceries, gas, and rent will remain stubbornly high.

Chicago Federal Reserve Bank President Austan Goolsbee on Friday left the door open to supporting an interest-rate cut in September should fresh data prove reassuring, but said recent reports showing a rise in services inflation give him some pause amid what he calls the "stagflationary" impulse from tariffs.