Inflation Finally Cools— Just in Time for Fed Decision

Markets are happy just hours before central bank decides on rates
By John Johnson,  Newser Staff
Posted Jun 12, 2024 8:54 AM CDT
Inflation Finally Cools— Just in Time for Fed Decision
Trader Michael Milano, center, works on the floor of the New York Stock Exchange on May 30, 2024.   (AP Photo/Richard Drew, File)

Wednesday will be another big day on Wall Street, as investors await a decision by the Federal Reserve on interest rates. Some key factors at play:

  • Inflation eases: Hours before the decision, a new report showed that inflation slowed in May, reports the New York Times. The Consumer Price Index was expected to rise 0.1% from the previous month, but it came in unchanged, per CNBC. The CPI also was up 3.3% when compared to the previous year, below expectations of 3.4% and down from April.

  • The markets: Dow futures rose immediately upon the report's release, with investors figuring it will put the Fed in more of a rate-cutting mood—or at least in less of a rate-hiking mood. Fed officials will have the data in hand for their 2pm meeting, notes the Wall Street Journal. When the markets opened at 9:30am, the Dow jumped more than 300 points and the S&P 500 furthered its gains into record territory.
  • Expectations: Heading into the day, most were expecting the Fed to keep the main interest rate unchanged, notes the AP. That remains the most likely outcome. But "today's soft CPI puts the Fed back in the driver's seat to steer towards a precautionary cut later this year," says Ashwin Alankar of Janus Henderson Investors, per CNBC.
(More inflation stories.)

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