Core Inflation Still Above Fed's Target, But Starting to Come Down
The latest consumer price index (CPI) report, released on July 12, 2023, showed that inflation slowed to 3% in June from 4% in May. This is the lowest level of inflation since March 2021.
Core CPI, which excludes food and energy prices, also slowed to 4.8% in June from 5.3% in May. This is still above the Federal Reserve's target of 2%, but it is a sign that inflation may be starting to come under control.
The slowdown in inflation is likely due to a number of factors, including the easing of supply chain disruptions and the decline in energy prices. However, it is too early to say whether this is a temporary trend or a sign that inflation is coming down for good.
Fed Still Expected to Raise Interest Rates Later This Month
The Fed is still expected to raise interest rates later this month, as it looks to bring down inflation. However, the latest CPI data may give the Fed some breathing room, as it shows that inflation is starting to come down.
The Fed is likely to raise interest rates by 0.50% at its next meeting on July 26-27. However, if inflation continues to fall, the Fed may decide to raise rates by a smaller amount or even pause its rate-hiking cycle.
Good News for Investors?
The slowdown in inflation is good news for investors, as it suggests that inflation may be starting to come under control. This could lead to lower interest rates, which would be good for stocks and other risk assets.
In particular, Bitcoin and other cryptocurrencies could benefit from this news, as they are often seen as a hedge against inflation. If inflation continues to fall, it could lead to a renewed interest in cryptocurrencies, which could boost their prices.
Overall, the latest CPI data is a sign that inflation may be starting to come under control. This is good news for investors, as it could lead to lower interest rates and a boost for stocks and other risk assets.
Here is a link to the latest CPI report: https://www.bls.gov/news.release/cpi.nr0.htm
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