US May inflation is moderate or increase the pressure on the Fed to cut interest rates this year

Release time：Jun 13, 2019 From：admin

US Labor Department data released on Wednesday showed that the US CPI in May was 0.1%, the smallest increase since January, expected 0.1%, the previous value of 0.3%; 1.8% year-on-year, expected 1.9%, the previous value of 2.0%.

In addition, the US core CPI in May was 0.1%, expected 0.2%, the previous value was 0.1%; 2.0% year-on-year, 2.1% expected, and the previous value was 2.1%.

The US CPI rose slightly in May, mainly due to the rebound in gasoline prices, which offset the rebound in food prices. This shows that inflation tends to be moderate and will increase the pressure on the Fed to cut interest rates this year.

From the past year, inflation has slowed sharply, which largely reflects the decline in energy costs, and the cost of health care has also shown a downward trend. However, there is some evidence that the recent downward trend may soon stop, which helps inflation close to the Fed's 2% target.

After the data was released, the US dollar index fell in a short-term, international gold short-term rise of 2 US dollars, is now reported 1333.25 US dollars / ounce. US stock index futures were higher in the short-term, and Dow futures fell 0.18%.

Federal funds futures show that after the release of US CPI data, the market expects the Fed to cut interest rates in July.

Expectations that the US will cut interest rates as early as next week are heating up. A number of former Fed officials, including Chairman Powell, have hinted that they are open to monetary easing. The Fed will hold a policy meeting on June 18-19.

TD Securities commented on CPI data that the slowdown in US inflation growth is largely a result of normalization of energy prices. The yield curve shows that the market expects the Fed to adopt aggressive easing measures. Given the unexpected correlation between the US dollar and US data, the US dollar will be particularly sensitive to data that supports easing. However, the Fed is currently in a quiet period, and it is expected that it will remain inactive next week, before it will be cautious about the dollar.

Forexlive analysts said that given the market's expected level of recent Fed policy decisions, the data released tonight is in line with expectations, and the market rate cuts are expected to be less likely to change. US retail sales data will be released on Friday or more, although the dollar may have an upside potential, but before the Fed’s expectations for interest rate cuts are fully digested, there is still room for fluctuations in the dollar, and any very bad data is still possible. This week further suppressed the dollar and US bond yields.