TechFlow reported on June 10 that US inflation figures released on Wednesday were broadly in line with expectations, reinforcing the view that Federal Reserve interest rates will remain elevated for a longer period. The data supported the expectation that the Fed will keep rates in the 3.50% to 3.75% range at its June meeting.
May CPI and Core CPI Match Forecasts
The data showed that the US consumer price index rose 4.2% year on year in May, while core CPI increased 2.9% year on year. Both readings were in line with expectations. With the inflation figures largely matching forecasts, the near-term policy discussion remained centered on an unchanged rate decision in June. The report also stated that a 25-basis-point rate increase is still expected by the end of the year.
According to the CME FedWatch tool, before the CPI data was released, the market-implied probability that the Federal Reserve would keep rates unchanged at its June meeting had already reached 98%. The information was cited by Jinshi and reflects how trading expectations for the June policy decision had been priced ahead of the inflation release.