U.S. stocks moved higher on Thursday as investors increased their bets that the Federal Reserve will lower interest rates in September. The latest gains reflected a market that is increasingly focused on the prospect of easier monetary policy after a run of inflation readings that came in softer than many had expected.

The rally showed how closely traders are watching economic data for signs that the central bank may be ready to shift course. When inflation cools, it can reduce pressure on the Fed to keep borrowing costs elevated, which often supports equities by improving the outlook for corporate profits and financing conditions.

Even so, expectations for a rate cut remain tied to incoming data and the Fed’s own assessment of the economy. Investors are likely to keep parsing labor-market reports, inflation figures, and comments from policymakers for clues about whether September will bring the first move lower.

For now, markets are leaning toward a more accommodative stance from the central bank, and that optimism helped push stocks higher on Thursday.