- U.S. inflation rose less than expected in May, with both headline and core Consumer Price Index (CPI) rates coming in below forecasts.
- The headline CPI increased by 0.1% month-over-month, while economists anticipated a 0.2% gain.
- The year-over-year CPI was 2.4%, slightly below the 2.5% prediction.
- Core CPI, which excludes food and energy, rose by 0.1% for the month, also under the 0.3% expectation.
- Financial markets expect the Federal Reserve to implement two interest rate cuts later this year, with the first likely in September.
The U.S. Consumer Price Index (CPI) figures for May showed a smaller rise than market expectations, according to data released by the Bureau of Labor Statistics. Both the overall and core CPI numbers rose by less than predicted, reflecting a slower pace of inflation.
For May, the headline CPI climbed 0.1% from the previous month. Economists had forecasted a 0.2% increase. The prior month’s rate was also 0.2%. On a year-over-year basis, the CPI increased by 2.4%, coming in below the 2.5% analysts expected and just above April’s annual rate of 2.3%.
Core CPI, which removes the more volatile food and energy categories to provide a clearer picture of underlying price trends, also rose by just 0.1% in May. This was below the 0.3% forecast. The annual core CPI was 2.8%, consistent with the rate observed in April and marginally lower than the 2.9% estimate.
After the data release, Bitcoin rose roughly 0.6%, reaching $109,800, and maintained a 0.3% increase over the past 24 hours. U.S. stock futures reversed earlier declines, with major indexes trading higher by about 0.4%. The yield on the 10-year Treasury note dropped five basis points to 4.45%.
Despite ongoing questions about the direction of inflation, traders remain certain that the Federal Reserve will start lowering interest rates before the end of the year. The CME FedWatch Tool indicates that traders fully anticipate two rate cuts, one expected in September and another in December. The latest inflation data has not changed these market expectations.
A check of broader markets shows continued resilience, with equities strengthening and bond yields easing in response to the new inflation information.
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