The U.S. inflation data released on Wednesday largely met expectations, further reinforcing the view that the Federal Reserve will hold interest rates steady at 3.50% to 3.75% at its June meeting, though a 25-basis-point hike is still anticipated by year-end. The data showed that the Consumer Price Index rose 4.2% year-over-year in May, while core CPI increased 2.9% year-over-year—both in line with forecasts. Prior to the CPI release, the CME FedWatch Tool indicated a 98% probability that the Fed would maintain rates unchanged at its June meeting. (Jin10)
U.S. inflation meets expectations, reinforcing the outlook for high interest rates.
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Summary
New U.S. inflation data released Wednesday showed a 4.2% year-over-year increase in the CPI for May, with core CPI at 2.9%, in line with forecasts. The figures reinforce expectations that the Federal Reserve will hold interest rates between 3.50% and 3.75% at its June meeting. Market pricing via the CME FedWatch tool already indicated a 98% probability of a rate hold prior to the inflation data release.
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