After experiencing a surge in inflation to over 7% in June 2022, the highest level seen since the early 1980s, the current reading stands at 2.7%. This significant decrease in the preferred inflation gauge might suggest a sense of relief, but Federal Reserve officials are not letting their guard down.
At the June two-day monetary policy meeting, which commenced on Tuesday, it is highly anticipated that rates will remain unchanged despite the positive May Consumer Price Index report. Federal Reserve Chair, after the previous policy meeting, expressed dissatisfaction with the 3% inflation rate, emphasizing that such a figure cannot be associated with contentment.
The Federal Reserve remains steadfast in its commitment to achieving a 2% inflation target. Until there is clear evidence that inflation is moving towards this goal in a sustainable manner, the possibility of rate cuts will not be entertained.
