Markets, Fed in Waiting as US Consumer Price Index Released Amidst Shavuot Holiday

The US Consumer Price Index (CPI) for May is expected to be released tomorrow (Wednesday) at 15:30, amidst the Shavuot holiday. This significant figure will have a major impact on markets and the Federal Reserve (Fed).

In the first three months of the year, CPI indexes exceeded expectations and disrupted the plans of the Fed and its chairman Jerome Powell to lower interest rates. Last month, for the first time this year, CPI matched market forecasts when it indicated an annual inflation rate of 3.4%.

What will happen this time? The forecasts predict a monthly increase of 0.1%, which means that the annual rate will remain unchanged – 3.4%. However, the core inflation index (minus food and energy) may provide a more optimistic outlook, with a decrease of one tenth of a percent bringing the annual rate in the index to 3.5%.

Despite these expectations, interest rates in the US are unlikely to drop as much as planned by the markets or priced by the Fed at the beginning of the year. The central bank’s original plan was for four reductions, but with higher-than-expected CPI readings throughout