US CPI Preview: Core Inflation Expected to Be Moderate, Could Ease Market Fears Over Rate Hikes

Odaily Planet Daily News Economists Durie and Wong predict that the overall US CPI data for May will remain hot, but core inflation, which is more critical to the Federal Reserve's interest rate outlook, should remain moderate, with its month-over-month increase in line with the 2% inflation target. Although supply shocks have pushed up prices for airfare, appliances, and electronic products, the softening of inflation in the non-essential services sector indicates that consumers are cutting back on non-essential spending.

A moderate core inflation reading will ease market concerns about Fed rate hikes following the stronger-than-expected non-farm payroll data for May. The economists stated that they still expect the Fed to cut interest rates by 25 basis points in the fourth quarter of this year. (Jin Shi)