Local economist analyses falling inflation rate and possible interest rate cut

The U.S. Department of Labor released a report showing that inflation is at its lowest level in over three years, but the population is still suffering from the burden of high prices.

Economists say the downward trend is a sign that some positive changes are coming. “It's positive that things are going down. We don't want inflation of eight, nine or ten percent. That's absurd,” says Steve Agee, economics professor at Oklahoma City University.

According to the U.S. Department of Labor, inflation fell to 2.9 percent in July, falling below the three percent mark for the first time in over three years.

That percentage is below the 40-year high of 9% in 2021. “Prices are still higher than they should be, but they are coming down,” Agee said.

He says for Oklahomans, there's more to this story than just a number.

“The consumer price index is a bundle of goods and services that they look at, and within that bundle, some prices are probably still quite high, relatively speaking,” Agee said.

Prices like groceries, car insurance, rent and utilities, to name a few.

But Agee says the downward trend is a sign that further easing could occur.

“So the next question is: What will the Federal Reserve do about interest rates?” he said.

Falling inflation is boosting his confidence that the Federal Reserve will cut interest rates at its September meeting.

“It takes time, though. It usually takes 12 to 18 months for monetary policy to take effect,” he said. “Try to be patient. Inflation is still there. We're still here. Spend your money carefully.”

As the Federal Reserve's efforts to curb inflation have pushed interest rates to their highest levels in over 20 years, Agee is confident that lowering these rates will benefit consumers in the long run.

The Federal Reserve will vote on an interest rate change at its September meeting.