Headline inflation rose 0.5% in May, in line with expectations, but a softer-than-expected core reading—excluding food and energy—helped support market sentiment.
The U.S. inflation report matched forecasts overall, reinforcing expectations that the Federal Reserve will keep its benchmark rate in the 350–375 bps range at its June 17 meeting, while still leaving room for a potential 25 bps hike by year-end.
According to the Bureau of Labor Statistics, the Consumer Price Index increased 4.2% year-over-year in May, exactly matching economists’ estimates and accelerating from 3.8% in April.
On a monthly basis, CPI rose 0.5%, in line with forecasts and slightly below April’s 0.6% gain. Core CPI, which strips out food and energy prices, increased just 0.2% versus expectations of 0.3% and a prior reading of 0.4%. Year-over-year core inflation came in at 2.9%, matching forecasts and edging higher from 2.8% in April.
Bitcoin (BTC) saw a modest bump after the release but remained under pressure overall, trading just above $61,000 and little changed over the past 24 hours.
U.S. stock futures declined broadly, while the 10-year Treasury yield rose to around 4.5%. Meanwhile, WTI crude oil extended losses, slipping another 1% to about $88 per barrel.
Ahead of the report, markets had already priced in a 98% probability that the Federal Reserve would hold rates steady at its June meeting, according to the CME FedWatch Tool.
