US CPI: Inflation for June Falls Below Consensus to 3%, Boosts Chances of Rate Cuts

Federal Reserve officials now have more good data to work with after latest CPI came in comfortably below estimates.

• US inflation fell more than analysts’ predictions for June. The consumer price index USCPI measured a 3% growth year-on-year, sliding comfortably below the 3.1% estimation. More importantly, the print could solidify the case of an earlier interest rate cut by the Federal Reserve. Policymakers at the central bank have been in heated discussions over when to move borrowing costs lower.
• Jay Powell, Fed chief, noted earlier this week that the central bank needs “more good data” before proceeding to ease borrowing conditions with a slash to interest rates, which are sitting at a 23-year high. June’s optimistic readout, which also slid below May’s 3.3% increase, could speed up the timeline.
• The CPI had a pronounced effect on markets broadly. The US dollar eased against its forex counterparts with the euro-dollar ticking higher toward $1.09. The dollar-yen tumbled to levels near ¥160.50 after previously floating near the ¥162 mark. Futures contracts tied to the major stock averages responded positively and were showing modest increases, looking to extend a record-setting run across the board.