Odaily Planet Daily report: U.S. May CPI data showed inflation rising to its highest level in three years, but modest gains in core prices eased Wall Street’s concerns about rate hikes.
Today’s CPI data and tomorrow’s PPI index are expected to influence the Fed’s policy stance, which will be revealed at the Fed meeting one week from now, chaired by Walsh for the first time. According to CME FedWatch, before the CPI inflation data release, the market priced in a 70% probability of a Fed rate hike by the end of 2026.
However, the market believes that a rate hike at the Fed’s next meeting is highly unlikely, with only a 13% probability of an increase at the July meeting. The short-term focus is on whether the Fed will clearly shift from a dovish stance to a neutral or hawkish stance at the upcoming meeting. This week’s CPI and PPI inflation data, along with progress in Iran-U.S. negotiations, could influence the balance between neutral and hawkish positioning. (Jin10)