(Washington) Inflation slowed slightly again in June in the United States, in line with market expectations, to return to 2.5% over a year, after 2.6% in May, according to the PCE index, favored by the Federal Reserve (FED) and published Friday by the Commerce Department.
Over the month, prices rose by 0.1%, after remaining stable the previous month.
The PCE index is moving in the same direction as the CPI index, published earlier in the month and to which pensions are indexed. This index showed a slowdown to 3% over a year and had even fallen by 0.1% over a month.
The monthly change is in line with analysts’ expectations, who were counting on a 0.1% increase in prices over the month, according to the consensus published by briefing.com.
So-called core inflation, i.e. excluding the more volatile prices of energy and food, remained stable over a year, at 2.6%, as in May, but accelerated slightly over a month, to 0.2% against 0.1% the previous month, again in line with market expectations.
The data should be considered good news by the markets, which are looking for any signs to anticipate when the Fed’s first interest rate cut will occur, hoped for at the beginning of the year for the first half of the year, but which has been continually postponed due to persistent inflation.
After a marked decline in 2023, inflation has in fact stabilized over the first six months of the year at a level above the long-term 2% target that the FED must achieve, encouraging its leaders to be patient and cautious.
The latter have repeatedly said that their decision on the first cut would be based on all the macroeconomic data, wanting to ensure that inflation was moving, “in a sustainable manner”, as regularly repeated by the chairman of the Fed, Jerome Powell, towards 2%.
However, the latter assured that there was no question of waiting for inflation to return to 2% to intervene on rates, judging that such a decision would be too late.
The next meeting of the Federal Open Market Committee (FOMC) is scheduled for July 30-31, but is unlikely to end with any rate action.
Markets are now pricing in a first rate cut from the Fed, currently in a range of 5.25% to 5.50%, at the next meeting on September 11-12, according to CME’s FedWatch monitoring tool. This will be the FOMC’s last meeting before the November 5 presidential elections.