Inflation has cooled for a 12th straight month in June, partly due to flat grocery prices offsetting a rebound in gas prices and rent hikes.
The 12 months of cooling inflation rates follows a 40-year record high in June 2022, while this past month marks the smallest yearly increase—just 3%—since March of 2021.
The cooling inflation in June was not preceded by an interest rate hike, raising questions about whether any further hikes by Federal Reserve will be necessary.
Just Monday a number of Federal Reserve officials had said an additional interest rate increase would be necessary to bring inflation back to the Central Bank’s goal of 2%.
“We’ve made a lot of progress in monetary policy, the work that we need to do, over the last year,” Federal Reserve Vice Chair for Supervision Michael Barr told a Bipartisan Policy Center meeting. “I would say we’re close, but we still have a bit of work to do.”
Meanwhile, Federal Reserve Chair Jerome Powell has stated repeatedly that one month’s data does not indicate a trend. However, he has also stressed that the Fed depends on data when considering interest rate decisions.
“They now have in hand evidence of a slowing labor market, a decline in goods prices excluding food and energy, roughly unchanged prices in an important category of services, and strong evidence of declining shelter inflation on the horizon,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution.
Bill Dudley, former President of the New York Federal Reserve, said Wednesday that he expects the Fed to raise interest rates just one more time—at its meeting later this month—to address post-pandemic inflation.
Noting that the next Fed meeting after July’s will be in September, Dudley said, “I can imagine by that point that it’s possible they’ll see enough news that makes them confident that they’ve done enough.”
