US inflation: will ever return to its 2% target?
- 12 July 2023
- Posted by: Federica Montella
- Categories: eToro CopyTrader, Investing
All eyes are on CPI data today
The US Labor Department is going to publish the Consumer Price Index (CPI) today at 13:30 GMT +1:00.
Based on the forecast, the CPI for June 2023 (year over year) is expected to be at 3.1%, down from the previous month’s reading when the index was at 4%.
The inflation in the US is clearly slowing down, the CPI, in fact, was at its high-level record of 9.1% in June 2022.
The same CPI, but calculated month over month is, however, expected to rise to 0.3%, up from the previous data of 0.1%.
The Core CPI, which excludes food and energy, is way more stubborn and its decline is slower than the CPI, reflecting persistent price pressures.
June’s Core CPI is forecasted to reach 5.0%, down from May’s 5.3%, and the Core CPI month-over-month data is anticipated to be at 0.3% while the previous data was 0.4%.
The Federal Reserve is implementing a restrictive monetary policy to bring down inflation to its 2% target and, in order to reach that target, new interest rate hikes are required.
Economists are expecting another rate increase of 25 basis points at the next FOMC meeting on 26 July.
After July’s meeting, some Federal Reserve officials have already expressed their views and they are in favour to hike the interest rate one more time this year.
The final decision will be taken after the CPI data release.
It is important to mention that strong hiring and a very low unemployment rate in the US are not helping inflation to slow down.
Will US inflation ever return to its 2% target? Let me know in the comments.
Portfolio update
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Federica Montella
eToro Popular Investor
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