U.S. consumer prices fell in June, marking the first decline since May 2020, mainly due to lower gasoline costs and moderating rents. This trend could lead to a potential interest rate cut by the Federal Reserve in September.
A measure of underlying inflation saw the smallest monthly increase since August 2021. Financial markets now anticipate the Fed's initiation of an easing cycle in September, with high probability.
"Barring rogue price data in July, the Fed has a checkered flag to reduce rates in September," stated Brian Bethune, an economics professor at Boston College. The Fed is expected to confirm this guidance at its July meeting.
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