The U.S. June CPI unexpectedly fell by 0.4%, likely cooling expectations for a Federal Reserve interest rate hike in late July.
The U.S. Consumer Price Index (CPI) for June recorded an unexpected decline of 0.4%, likely impacting Federal Reserve's plans for interest rate adjustments in its upcoming meeting.
This drop may significantly alter expectations for a Fed rate hike scheduled for late July.
According to the latest inflation data, the CPI fell by 0.4% in June, contrasting with economist forecasts of a mere 0.1% decrease following a substantial 0.5% increase in May.
On a year-over-year basis, CPI rose by 3.5%, which is lower than the anticipated 3.8% and the 4.2% recorded in May. Meanwhile, the core CPI, which excludes food and energy, remained stable, defying predictions of a 0.2% increase.
Year-over-year, the core CPI recorded a 2.6% rise compared to the expected 2.8% and 2.9% in May. This softer inflation data is expected to quell rising expectations for a Federal Reserve interest rate hike in the near future.
In response to the report, Bitcoin's price surged to $63,400, reflecting a nearly 2% increase within the last 24 hours. Additionally, U.S. stock index futures also saw gains, with the Nasdaq 100 rising by 1.25%.
Bond yields fell significantly, with the U.S. 2-year Treasury yield dropping by seven basis points to 4.19%, and the 10-year yield decreasing by five basis points to 4.56%.
This CPI report is particularly critical as it follows remarks from Fed Governor Chris Waller, who indicated support for an immediate rate hike if core CPI figures did not show a decline. Prior to this data release, the likelihood of a July rate hike had surged from 8% to as high as 42%, according to CME FedWatch.
Investors are anticipating comments from Fed Chairman Kevin Warsh, who is expected to address Congress regarding the economic situation shortly.
