Hot Inflation Data Quashes the Chances of a June Fed Rate Cut
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US inflation came in at 0.4% MoM for the third consecutive month, more than double the rate needed to bring inflation down to 2% YoY. Expectations for a June Federal Reserve interest rate cut have collapsed. US core consumer price inflation came in at 0.4% MoM, above the 0.3% consensus. The details show the 0.4% MoM core increase was 0.359% to three decimal places. The strength was caused by the supercore services, which rose 0.65% MoM with medical care services jumping 0.6% MoM and transport services increasing 1.5% MoM. Given this situation, a June rate cut is not happening, barring a rapid reversal of fortunes for the economy. July is also doubtful, meaning September is the more probable start point of any easing, which would limit the Fed to a maximum of just three rate cuts this year.
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