U.S. Core Inflation Cools, Bolstering Case for Fed Rate Cut
- The core consumer price index, which removes energy and food costs, rose 2% from a year earlier, below forecasts, according to a Labour Department report Wednesday. The figure rose 0.1% from the prior month for a fourth-straight time and missed estimates. The broader CPI increased at an annual 1.8%, less than projected.
- U.S. stock futures briefly advanced and Treasury yields dipped as below-forecast inflation followed signs of slower economic growth that stands to bolster investor expectations for Fed rate cuts this year.
- The market-implied odds of a July cut increased after the report, with Fed funds futures now indicating almost a quarter-point of easing in the next two months.
- Lower gasoline prices played a role in keeping broader inflation tame. Energy prices fell 0.6% from the prior month and 0.5% from a year earlier as all major components in the category fell on an annual basis.