The latest inflation data released by the US Bureau of Labor Statistics has raised investors’ hopes that interest rate cuts might be on the horizon.
US annual consumer price inflation has slowed to 3% in June 2024, from 3.3% the previous month, a great contrast to the expectations of a decline to 3.1%. Meanwhile, core inflation marked 3.3%, the lowest pace of increase since April 2021, against expectations of 3.4%.
“The US Consumer Price Index statistics for June was a game changer,” Mohamed Hashad, Chief Market Strategist at Noor Capital, told Finance Middle East.
“Gold prices surged in response to a surprising decrease in inflation, which fell below 0% month over month for the first time since early 2023. Since the Fed’s main goal is to manage inflation, these data strengthened the case for a probable rate drop later this year.”
Despite the promising data, the rate is still above the 2% target set by the US Federal Reserve. During his remarks to Congress earlier in the week, Fed Chair Jerome Powell said he wanted to see “more good data” on inflation before implementing a change in interest rates. Nonetheless, investors eagerly await the next rate-cutting meeting.
