Inflation Expectations Cooling
June consumer inflation expectations eased to 6.0%, down from 6.4% in May and 7.0% in April—marking a notable steady decline .
The Conference Board attributes this drop to increased mentions of “easing inflation” in consumer feedback, even though tariffs and price concerns remain top of mind .
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🔍 Market & Policy Implications
June's decline in inflation expectations aligns with softer May CPI and PCE data: notably, May’s core PCE inflation rose only about 0.1% month-over-month (2.6% YoY) .
Fed Chair Jerome Powell is emphasizing caution, holding off on rate cuts given lingering tariff uncertainties and upcoming summer inflation data .
Minneapolis Fed’s Kashkari forecasts two rate cuts later this year (starting in September), but maintains flexibility, citing current inflation trends .
🧭 What It Means
Indicator June Status Trend
Consumer inflation expectations 6.0% Down from 6.4% in May
Core PCE inflation (May) ~2.6% YoY Gradually slowing
Fed policy outlook Watchful + patient Rate cuts may arrive in September
Consumers expect slower inflation over the next 12 months.
The Fed is likely to maintain current rates through July, given data ambiguity and tariff-driven inflation risks.
Cuts may begin in September if incoming inflation metrics remain subdued.
✅ Bottom Line
June’s modest decline in inflation expectations (to around 6%) signals easing consumer worries. Combined with soft core PCE figures and a cautious Fed stance, it suggests a gradual cooling in price pressure. However, tariff impacts and economic headwinds mean the Fed
is unlikely to cut rates before September.