Core Inflation Stalls in June While Warsh Withholds Guidance on What's Next

June CPI inflation showed unexpected weakness with flat core inflation, while Fed Chair Warsh avoided near-term rate guidance in his congressional testimony. The data and testimony have led to a recalibration of Fed rate hike expectations.

Key Takeaways

• 1.Headline CPI fell 0.4% m/m, with core CPI unchanged, marking a significant slowdown in inflation.
• 2.Fed Chair Warsh provided no near-term rate guidance in his testimony, focusing instead on structural task forces.
• 3.Market pricing for a Fed rate hike in July declined significantly to 3bps following the soft CPI print.

Table of Contents

• Key points
• US CPI inflation slows
• Energy reversal drove the headline
• Core CPI lowest since 2020
• Warsh Testimony
• Summing up: CPI, PCE and the FED

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