U.S. inflation data was released on Wednesday as expected, reinforcing the view that the Federal Reserve will keep interest rates between 350 and 375 basis points at its June 17 meeting but is likely to raise rates by 25 basis points by the end of the year.
The year-over-year consumer price index rose 4.2% in May, according to a report from the Bureau of Labor Statistics. Economists expected a 4.2% increase after April’s 3.8% increase.
On a month-on-month basis, the CPI rose 0.5%, compared to expectations of 0.5% and compared to a 0.6% increase in April. The core CPI, which excludes food and energy costs, rose 0.2% in May compared to forecasts of 0.3% and 0.4% in April. Year-over-year core CPI rose 2.9% versus forecasts of 2.9% and 2.8% in April.
While bitcoin saw a slight rally after the data was released, it still remains under pressure. bitcoin traded just above $61,000 after the report, virtually unchanged in the past 24 hours. US stock index futures fell across the board and the 10-year Treasury yield rose to 4.5%. WTI crude oil continues to fall, down 1% on the day to $88.
Before the CPI data, markets were pricing in a 98% chance that the Federal Reserve would leave interest rates unchanged at its June meeting, according to the CME Fed Watch tool.
