The possibility of the Federal Reserve (Fed) cutting interest rates is expected to rise as the U.S. Consumer Price Index (CPI) for June, to be announced on the 11th, is anticipated to drop compared to the previous month.
On the 10th (local time), foreign media outlets such as Investor’s Business Daily (IBD) reported that the June CPI is expected to fall to 3.1% year-on-year, which is lower than May’s 3.3% as well as the smallest increase since January.
U.S. prices showed an upward trend from January to March but have been on a downward trajectory since.
Excluding volatile food and energy prices, the core consumer price index is expected to remain at 3.4% year-on-year, the same as the previous month.
Bank of America (BofA) economists Stephen Juneau and Michael Gapen analyzed, “Following the positive report in May, the June CPI report will fuel further optimism,” suggesting as especially good news for the Fed.
At a House hearing on that day, Fed Chairman Jerome Powell testified that the overheating in the U.S. labor market is calming down, giving the impression that a rate cut in September has been virtually decided.
According to IBD, the Fed has been focusing on the possibility of a rate cut since the beginning of the year, suggesting the possibility of lowering rates more than twice within the year due to falling prices.
The U.S. June CPI will be announced at 9:30 PM KST on the 11th.
