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STORY: Fresh inflation data on Friday showed U.S. prices continue to cool.

The Commerce Department's personal consumption expenditures price index - the Federal Reserve's preferred inflation gauge - nudged up 0.1% last month, in line with expectations.

That put the annual inflation rate, for the 12 months through June, at 2.5% - the smallest year-over-year gain in four months.

The Federal Reserve has raised borrowing costs to slow the economy and bring the inflation rate down to its annual target of 2%.

Its goal is to orchestrate a so-called soft landing, in which inflation cools, the job market remains relatively strong and the country avoids a severe downtown.

And the consensus is... so far, so good.

Data on gross domestic product, released a day earlier, showed the economy grew at a rate of 2.1% in the first of half of the year. That's half the pace of the prior six months.

GDP has cooled in part due to a slowdown in consumer spending, which accounts for more than two-thirds of economic activity.

And yet the job market remains relatively resilient.

All of this combined has put the Fed on a path to start cutting interest rates as soon as September.

Indications of the Fed's next moves will come next week, when the central bank concludes its latest two-day policy meeting.