Inflation in the U.S. showed signs of increasing in June, aligning largely with market expectations and potentially paving the way for another interest rate cut by the Federal Reserve as early as September.
The headline Consumer Price Index (CPI) recorded a 0.3% rise last month, matching economists’ forecasts of 0.3%, with a modest increase of only 0.1% in May. Annually, the CPI rose by 2.7%, consistent with expectations, compared to a 2.4% increase in May.
When we look at the core CPI, which excludes volatile food and energy prices, it registered a 0.2% increase in June, slightly below the anticipated 0.3% and an uptick from 0.1% in May. Year-over-year, core CPI rose by 2.9%—again, just under the expected 3.0% but up from 2.8% in May.
Interestingly, amidst a significant decline from an all-time high of nearly $124,000 just over 24 hours prior, Bitcoin (BTC) managed to recover slightly, reaching $117,300 following the data release.
A glance at traditional markets reveals a minor boost in U.S. stock indices futures, with the S&P 500 up by 0.4%. Meanwhile, the 10-year Treasury yield has dipped by two basis points, settling at 4.41%.
This new inflation data comes at a critical juncture for investors who are keenly observing trends to determine if inflation is subsiding enough for the Federal Reserve to consider lowering interest rates in the latter part of the year. While at least two Federal Reserve members have expressed a desire for a rate cut during the central bank’s meeting in late July, this sentiment does not appear to be broadly supported by Fed Chair Jerome Powell or other policymakers.
Consequently, the upcoming Federal Reserve meeting in September has become the prime candidate for the potential resumption of rate cuts. Prior to the release of this morning’s inflation data, the likelihood of a rate cut in September stood at just under 62%, as indicated by data from CME FedWatch.
