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.
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.
The recent tariff hikes under the Trump administration are stirring uncertainty across global markets, with cryptocurrencies feeling the ripple effects.
In a recent live address, U.S. President Donald Trump declared that a new base tariff of 10% would be applied universally to all countries.
Consumer spending in the U.S. showed weaker-than-expected growth in February, increasing only 0.1%, which was on the lower end of economists’ forecasts.
In February, the U.S. maintained its annual inflation rate at 2.5%, as reflected in the Personal Consumption Expenditures (PCE) Price Index, according to data released by the Bureau of Economic Analysis.