Federal Reserve likely to pause tomorrow
US CPI data for the month of May slowed at the headline level showing 4% year-on-year inflation that was a touch softer than forecasts of 4.1%. Core CPI remains stubbornly higher at 5.3%. The case for a pause tomorrow in Federal Reserve (Fed) hiking policy has no doubt already been made and it was unlikely that this inflation print was going to upset that applecart. Markets are still expecting a final hike before we can announce peak rates but this eleventh consecutive monthly slowdown in inflation is unlikely to reverse next month, so it is now in doubt whether the Fed will feel it has to remain ever hawkish. The accompanying announcements to its decision tomorrow will be all the more important therefore.
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