** CPI for May - favorable! **
Overall, today's U.S. CPI report is relatively favorable for financial markets, as it suggests that inflation is under control, which could support a "dovish" (easing) stance from the Fed on interest rates. Market reactions will continue to evolve over the coming hours and days, but the initial direction is likely as outlined above.
U.S. CPI Status (May 2025):
* Year-on-year CPI growth (CPI y-y): 2.4% (in line with market expectations, previous value 2.3%).
* Month-on-month CPI growth (CPI m-m): 0.1% (market expectation 0.2%, previous value 0.2%).
* Year-on-year Core CPI (Core CPI y-y): 2.8% (market expectation 2.9%, previous value 2.8%).
* Month-on-month Core CPI (Core CPI m-m): 0.1% (market expectation 0.3%, previous value 0.2%).
Today's data indicates a slowing of month-on-month growth for both headline and core CPI, with year-on-year inflation holding near or slightly above the Fed's 2% target. Core inflation, which excludes volatile food and energy prices, is often considered a better indicator of the long-term inflationary trend. Its slowdown below expectations is positive news for the markets.
* Fed Rate Expectations: The market will likely increase bets on an earlier interest rate cut by the Fed.
Prior to the data release, there was uncertainty regarding the timing and number of rate cuts.
Today's data may strengthen the conviction that the Fed will have room to loosen monetary policy sooner than previously anticipated.