The Fed is set to cut rates this week after softer inflation readings and clear signs that producer prices are easing. CPI came in cooler, with core inflation trending toward 2.5% YoY, and PPI unexpectedly dropped, underscoring disinflation pressures across supply chains. Markets are weighing the move as the start of a broader easing cycle, with betting odds showing about a 48% chance of three cuts by year-end. The cut itself is expected, but the timing underscores the unusual dynamic — the Fed is loosening policy at a moment when headline GDP prints remain strong.

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