The July CPI data clears the way for the Fed to start cutting interest rates at its next meeting, writes Nick Timiraos, the "Fed mouthpiece". With the labour market showing signs of potential weakness recently, the debate at the Fed's September meeting will focus on whether to cut rates by 25 basis points in the traditional way, or a larger 50 basis points. Wednesday's inflation data does not settle that debate. Instead, the debate is likely to hinge on labour market reports, including weekly jobless claims and the August non-farm payrolls report due on September 6. Wednesday's inflation report was more muted, but a strong rise in housing costs is likely to dampen enthusiasm for the data. However, Federal Reserve leaders have signaled that they are ready to start cutting interest rates next month, in part because inflation data in May and June were also much more muted.