Truflation Urges Fed Rate Cut After Accurate Inflation Forecast

Oliver Rust, head of data at Truflation, argues that a combination of softening household demand, mixed employment signals, and falling gasoline prices marks a turning point for the U.S. economy. According to the firm, personal consumption expenditures have stalled, and consumer reliance on credit is rising as excess savings dwindle. While the BEA confirmed headline inflation remained at 3.7% annually in July, Truflation’s analysis suggests the current high-interest environment is increasingly unnecessary.

Despite this push, the Federal Reserve remains divided. Officials like Kansas City Fed President Jeffrey Schmid have signaled that current rates may not be restrictive enough to hit the central bank’s 2% target, pointing to persistent pressure from services, wage growth, and utility costs. Truflation’s own data highlights these risks, noting that utility prices reached their highest levels since mid-2024, partly driven by electricity demand for artificial intelligence infrastructure. While market participants await further guidance from Fed leadership, the debate underscores a growing tension between alternative, high-frequency data models and the cautious, monthly-lagged metrics traditionally favored by policymakers.