U.S. inflation data arrived as expected on Wednesday, reinforcing the view that the Federal Reserve will keep interest rates between 350 and 375 basis points at its June 17 meeting, but will likely raise rates by 25 basis points by the end of the year.
The year-over-year consumer price index rose 4.2% in May, according to a report from the Bureau of Labor Statistics. Economists had expected a 4.2% increase after April’s 3.8% increase.
Month over month, the CPI rose 0.2%, compared to an expected rise of 0.5% and a rise of 0.6% in April. The core CPI, which excludes food and energy costs, rose 0.2% in May compared with forecasts of 0.3% and 0.4% in April. The year-over-year core CPI rose 2.9% from forecasts of 2.9% and 2.8% in April.
Although Bitcoin saw an uptick after the data was released, it still remains under pressure. Bitcoin is trading just above $61,000 after the report, virtually unchanged over the past 24 hours. U.S. stock index futures fell across the board and the 10-year Treasury yield rose to 4.5%. WTI crude oil continues to fall, down another 1% on the day to $88.
Before the CPI data was released, markets were pricing in a 98% chance that the Federal Reserve would leave interest rates unchanged at its June meeting, according to the CME Fed Watch tool.
