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US inflation: In May, the overall Consumer Price Index increased by 4.2% year-on-year. Our IMEN nowcast had indicated a slightly lower rate of 4.1%. Core CPI was 2.9%.
We still expect the Fed to hold interest rates steady next week. But an interest rate hike later this year is becoming increasingly likely.
Gianluca Benigno (The Central Banks' Watcher) comments: "While headline inflation continued to face upward pressure from fuel and transportation-related components and some tariff-sensitive goods categories showed further firming, evidence of broad-based inflation acceleration remained limited."
Gregory Daco (EY Parthenon) warns: "The longer the Middle East conflict persists, the broader and more persistent inflationary pressures are likely to become."