Investors are awaiting the release of the latest Consumer Price Index (CPI) on Wednesday in an effort to gain insight into the potential route that the Federal Reserve may take regarding its monetary policy.
Headline inflation in June is expected to rise 3.1% compared to the previous year, a continued decline from May’s 4% figure, estimates from Bloomberg read. This would be the slowest annual increase in headline inflation since March 2021.
Compared to the previous month, consumer prices are expected to have risen 0.3% in June; up from May’s 0.1% rise. On a core inflation basis, prices in June are expected to have risen 0.3% compared to May and 5% over the previous year.
Despite the cooldown in inflation, investors cannot write off further monetary tightening by the Federal Reserve. Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly indicated on Monday that further rate hikes may be needed in order for the Fed to reach its 2% inflation target.