Inflation metrics were among the most anticipated economic releases during June. This shouldn’t come as a surprise since inflation impacts everyone and has arguably been the most closely followed economic data point since prices initially began accelerating in 2021. Those persistent price pressures caused the Federal Reserve to implement one of the most aggressive rate-hiking cycles in their history. The Fed increased the overnight rate to 5.5% which ultimately brought the headline Consumer Price Index (CPI) down from a peak of 9% to a low of 3% in June of 2023. Sadly, year-over-year CPI hasn’t declined any further since then, even though the overnight rate has remained restrictive and untouched for nearly a year. Monthly CPI values accelerated for the first four months of the year until May’s inflation data (released in June) finally provided some relief. During that time, inflation reestablished its ability to move markets, as market participants try to predict the Federal Reserve’s next actions.
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