Inflation unexpectedly cools off as the Fed decides its next move

Inflation unexpectedly cools off as the Fed decides its next move
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  • The Consumer Price Index, an inflation measure, increased 3.3% year over year in May.
  • That’s just below the 3.4% rate in April and the forecast.
  • The CPI was unexpectedly unchanged from April to May.

The year-over-year percent change in the Consumer Price Index in May came in just below the forecast and so did the percent change in core CPI.

A news release on Wednesday from the Bureau of Labor Statistics noted the CPI increased 3.3% from May 2023 to this past May. The forecast noted on Investing.com was 3.4%, which would have been the same year-over-year rise as in April.

The CPI was unchanged from April to May. The forecast was an increase of 0.1% following the 0.3% increase from March to April.

Core CPI, which excludes food and energy, rose 3.4% year over year in May. The expectation for this per Investing.com was an increase of 3.5%, which would have also meant a cooler rate than the 3.6% rate before it.

Core CPI rose 0.2% in May from the preceding month. That's less than the forecast of 0.3% and the previous rate of 0.3%.

Inflation measures like the CPI suggest US inflation is still too high although these rates look a lot better than back in 2022. The Fed's interest rate decision will be announced later on Wednesday; it's expected the target range for the federal funds rate will continue to be the same.

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While Americans are probably not going to see interest rate cuts for now, there could be cuts later this year.

"I think that there'll be enough softness and coolness in the economy for them to begin to cut rates this year," David Kelly, the chief global strategist at J.P. Morgan Asset Management, told Business Insider earlier this month. "And if I had to bet, I bet that we will get two rate cuts, one in September and one in December."

This is a developing story. Please check back for updates.

Read the original article on Business Insider

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