Wall Street institutions and economists at leading investment banks believe that slower gross domestic product (GDP) growth and lower-than-expected core personal consumption expenditures (PCE) price index of the United States in the second quarter would support the Federal Reserve cutting the Fed funds rate next week.

Data released by the US Department of Commerce on Friday showed that US GDP grew at a 2.1-percent annual rate in the second quarter, decelerating from the 3.1 percent expansion in the previous quarter, but was above consensus expectations of 1.8 percent.

The core PCE price index, an inflation gauge preferred by the Fed that excludes the volatile food and energy prices, increased 1.8 percent, continuing to undershoot the Fed's 2 percent inflation target.

Both the GDP growth and inflation data of the United States were revised back to 2014 and showed "there was weaker momentum heading into this year," according to a research report released by the Bank of America Merrill Lynch on Friday.

The report noted that the recent data and revisions indicate "support for the cut" by the Fed as they "showed growth momentum to be weaker, particularly investment which they are most worried about, and core PCE inflation is a touch softer."

The viewpoint was echoed by the Capital Economics, which said in a note Friday that the slowdown in US GDP growth in the second quarter "justifies a 25-basis-point cut by the Fed next week."

The Fed will hold its policy meeting on July 30-31. Investors have priced in a 25-basis-point benchmark interest rate cut.

Likewise, Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank, and Sonia Meskin, US economist at Standard Chartered Bank, indicated in their research report that the undershoot in core inflation "widens the gap versus the Taylor-rule target and increases the zero-lower-bound risk."

Both effects would "support expectations for further easing," the report said.