JUST IN: Inflation Data Released – Here is What You Should Know

One of the most important data points that will shape future Federal Reserve interest rate policy was just released - the CPI.

Overall inflation in June fell to 3% year over year, lower than the expectations (expectations were for 3.1%) – a slowdown from the 3.3% annual pace set in May, with no MoM changes.

The core CPI inflation, which excludes volatile food and energy prices, is seen at 3.3% year over year, while the monthly core CPI fell by 0.1%.

The applications for unemployment benefits were announced at 222,000 – down from the previous 238,000.

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Federal Reserve Chairman Jerome Powell presented the Semi-Annual Monetary Policy Report and testified before US Congress and the House Committee on Financial Services. Powell emphasized that they are not considering a policy rate cut until they are confident inflation is heading sustainably towards 2%.

Regarding the job market, Powell acknowledged that recent data indicate a significant cooling in employment conditions.

Despite Powell’s remarks, there was little impact on market expectations for a Fed rate cut in September. According to the CME FedWatch Tool, the probability of the Fed maintaining the policy rate in September remains around 26%, virtually unchanged from before Powell’s statements.

June’s CPI data reveals a good probability for September rate cuts, which could potentially boost market confidence.

Alexander Stefanov