A government report Tuesday showed a key gauge of inflation rising at a muted pace in June, bolstering the arguments of President Donald Trump and some economists that the Federal Reserve has room to cut interest rates this week for the first time since the financial crisis of 2008.

Prices on consumer purchases, excluding food and energy, rose by 0.2% in June, leaving them up 1.4%  over the past 12 months, a report from the Commerce Department's Bureau of Economic Analysis showed. The annual pace is below the Fed's target of 2%.

The central bank typically cuts interest rates when the economy is slowing, but such moves tend to stimulate the economy and push up the rate of inflation.

Officials including Trump have argued that although the economy remains in growth mode, the low level of inflation means the Fed can cut official U.S. interest rates to provide a further boost, without risking a drastic surge in consumer prices.

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