With the Federal Reserve's next meeting just days away, the market has been pouring over any relevant economic data to look for clues on the current state of inflation and the economy as the Fed gears up to cut interest rates for the first time since early 2020. The August jobs report sent the market reeling last Friday after it showed the U.S. economy added fewer jobs than expected. Last week, the S 500 posted its most severe week of losses since March of 2023.

But that already feels like a lifetime ago after the U.S. Bureau of Labor Statistics recently released the August reading of the Consumer Price Index for All Urban Consumers. The market just got its next hint on inflation. Here's why it's important and what it means for the Fed.

Data in recent months has indicated that the economy is cooling and inflation is slowing. U.S. non-farm payrolls added 142,000 jobs in August, 19,000 below consensus. Unemployment ticked down marginally to 4.2%. Meanwhile, Fed Chairman Jerome Powell all but indicated that the Fed will begin cutting interest rates at its upcoming meeting, saying at the Fed's August Summit in Jackson Hole that "the time has come for policy to adjust."

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Source Fool.com