U.S. consumer prices were unchanged in July but a rise in industrial output and home building suggested a pickup in economic activity that could allow the Federal Reserve to raise interest rates this year.
Tuesday’s economic reports came as influential New York Fed President William Dudley said the U.S. central bank could raise interest rates next month, citing a tightening labor market that he said was starting to spur faster wage growth.
“The strong housing starts and industrial output performance will bolster the Fed confidence that growth momentum has rebounded, potentially supporting the bias for a near-term hike,” said Millan Mulraine, deputy chief economist at TD Securities in New York. “Nevertheless, with inflation continuing to miss to the downside, the case for caution remains strong.”
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