The Federal Reserve’s (Fed) preferred inflation gauge was in line with forecasts, keeping alive expectations that interest rates could fall faster than policymakers expected, the Wall Street Journal points out.
The consumer price index (CPI), which excludes volatile energy and food prices, rose 2.6% from a year ago, a slowdown from the 2.8% pace recorded in April.
Core CPI inflation rose 0.1% over the month, compared to a 0.2% rise in April. The overall 12-month figure was 2.6%, a slowdown from the 2.7% pace recorded in April, according to official data.
During the month, this index remained stable after increasing 0.3% in April, marking the first time that consumer prices have not increased in six months.
“The general disinflationary trend that we’re seeing is not always going to be smooth sailing,” Kevin Flanagan, head of fixed income strategy at WisdomTree, was quoted as saying by the business daily.
Fed officials plan just one cut this year. They have repeatedly said that inflation data will determine their next move, and some have even left the door open to raising interest rates.
Predictions of a more aggressive easing cycle are based mainly on estimates that inflation could fall as the economy is weighed down by high borrowing costs.
Inflation figures for June are due on July 26, just before the Fed’s next rate-setting meeting on July 30-31.
At its last meeting, the American central bank decided to maintain its rate range between 5.25% and 5.5%.
