Kathy Bostjancic, chief economist at Nationwide Financial, said that a large amount of data will influence the Fed's decision in the next two months, but if the trend continues as it is now, the Fed should be able to relax its policy. “I think the possibility of cutting interest rates in September is quite high.” The key factor in her judgment is that the labor market will weaken. But for Federal Reserve officials, the trouble is that inflation may rise at the same time.

Kathy Bostjancic, chief economist at Nationwide Financial, said that a large amount of data will influence the Fed's decision in the next two months, but if the trend continues as it is now, the Fed should be able to relax its policy. “I think the possibility of cutting interest rates in September is quite high.” The key factor in her judgment is that the labor market will weaken. But for Federal Reserve officials, the trouble is that inflation may rise at the same time.