Inflation Research Brief
Inflation Halves Peak Rate, Giving Fed
Room to Maneuver in Future Meetings
Inflation slows to 27-month low. The headline consumer price index rose by 4.0 percent year-over-year in May, less than half the 9.1 percent pace recorded last June. While consumer prices are still rising more rapidly than the Federal Reserve prefers, the cool down from peak levels encouraged officials to hold the federal funds rate flat in June. The hiatus allows more time for the Federal Open Market Committee to assess how the past 15 months of tightening monetary policy has affected the economy and consumer prices. While in the last meeting, Chairman Powell made no statement indicating the overnight lending rate would stay flat, last month’s meaningful headline inflation slowdown could lead to further stabilization in monetary policy in the coming months.