The Consumer Price Index declined by 0.1 percent in June, according to the U.S. Bureau of Labor Statistics, and has risen 3.0 percent in the past 12 months. In May, the CPI was unchanged from the previous month. The CPI for all items less food and energy rose 0.1 percent in July and is up 3.3 percent in the past 12 months.
The falling CPI reading is a positive sign that the Federal Open Market Committee may choose to lower the target federal funds rate at its meeting in September, paving the way for falling interest rates in the fourth quarter.
Commenting on the results, Ryan Brandham, head of global capital markets, North America at Validus Risk Management, said: “The U.S. CPI came in slightly softer than expected. The market will likely take this as support for a September rate cut, and take equities higher and lower U.S. yields. This is a reassuring number for the Fed — the question is, is it reassuring enough to give them comfort to lower rates in September?â
