US inflation slows in June, suggesting potential impact of Fed’s tight monetary policy

(MENAFN) In June, inflation in the United States decelerated more than anticipated, suggesting that the Federal Reserve's stringent monetary policies might be effectively curbing inflationary pressures. The consumer price index (CPI) for June slowed to an annual rate of 3 percent, surpassing the forecasted 3.1 percent. On a monthly basis, the CPI unexpectedly contracted, registering a -0.1 percent change compared to the expected 0.1 percent growth. Additionally, the core CPI, which excludes volatile food and energy prices, also showed signs of slowing, recording an annual rate of 3.3 percent and a monthly rate of 0.1 percent. These figures were lower than the expected 3.4 percent annual rate, which remained unchanged from May.

Federal Reserve Chairman Jerome Powell, speaking on Wednesday, expressed cautious optimism, noting that while it was too early to declare victory over inflation, the United States appeared to be on a path toward price stability and low unemployment. Powell, along with other Fed officials, emphasized their commitment to maintaining current interest rates until they are confident that inflation is progressing toward the central bank's 2 percent target. The unexpected easing of inflationary pressures had immediate market repercussions, with the U.S. dollar dropping to a two-month low and U.S. stock futures rising. The Standard & Poor's 500 index notably surpassed 5,700 points in pre-market trading, marking an all-time high and reflecting investor optimism in light of the new data. 



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