The decision arrives even as inflation showed signs of moderating, with Labor Department data released this morning showing that the consumer price index (CPI) increased by 3.3% in May – a slower pace than the prior month.
The monthly reading, meanwhile, was unchanged, posting a cooler-than-expected performance between April and May. Still, today’s Fed decision comes as little surprise, with markets having scaled back expectations of rate cuts until at least after the summer thanks to a still-strong economy and persistent inflation.
First American Financial Corporation’s deputy chief economist Odeta Kushi said prior to the announcement that investors were “overwhelmingly expecting” rates to remain unchanged in June, with the likelihood of a September cut hovering around the 50-50 mark.
Kushi said factors that would influence the Fed’s outlook for the rest of the year included “inflation, and the factors that drive inflation” including the labor market’s performance and pace of economic activity.
The Fed’s next decision on interest rates is due to arrive at the end of next month (July 30-31).
