Slower US consumer price growth reduces odds of a July Fed rate hike to 17%, down from 40%.
The US Dollar retreated after June consumer price inflation eased to 3.5% from 4.2%, while core inflation dropped to 2.6% from 2.8%. The data suggests a moderating inflation trend, aligning with market expectations for a less aggressive Federal Reserve stance.
Prior to the release, markets priced a 40% chance of a July rate hike, which has since fallen to 17%. Expectations for two rounds of monetary tightening in 2026 also declined, reflecting shifting sentiment on the Fed’s policy path.
The softer inflation print may reinforce bets on a slower pace of rate increases, though Fed officials have signaled a data-dependent approach.