The most recent data show that the inflation in the United States dipped in June for the first time since 2020.
According to the Bureau of Labor Statistics report, the consumer price index (CPI) has declined by 0.1% after being unchanged in May. On an annual basis, CPI increased by 3% compared to 3.3% the month prior. The analysts expected a 0.1% increase on a monthly basis and a 3.1% increase on a year-over-year basis.
This marks the first time that the CPI came negative on a monthly basis while setting the annual gain to its slowest pace since early 2021.
The promising inflation data have boosted the expectations of an interest rate cut by the Federal Reserve. LSEG data now shows that the expectations of a cut in September are 100% among traders, compared to 72% prior to the publication of the Bureau of Labor Statistics report.
It also increases the likelihood of two interest rate cuts before the end of the year.
“With another good CPI print under their belt, the window is open for the Federal Reserve to cut interest rates as early as September, and potentially again in December, assuming the inflation data continues to cooperate,” Skyler Weinand, chief investment officer at Regan Capital, wrote in a note sent to clients.