- Fed will have to continue its strong posture until the next meeting.
- Following the data release in May, Treasury rates spiked, and stock futures plummeted.
On June 15, the U.S Federal Reserve will meet to decide interest rates, and investors fear a more hawkish tone from the central bank, which might lead to a rise in the currency and bond yields. Inflation in the United States surged to a 40-year high in May, putting pressure on the Federal Reserve to continue its aggressive string of interest-rate rises and pressure on the White House and the Democrats.
According to Labor Department figures released Friday, the Consumer Price Index rose 8.6 percent from a year earlier. Inflation climbed by 1% from the previous month, above all expectations. Food, water, and fuel were the most significant expenses. A 0.6 percent increase in the so-called core CPI, which excludes the more volatile food and energy components, was also above estimates.
Optimism Mixed With Panic
Data show that inflation is still soaring, and the Fed will have to continue its strong posture until the next meeting since it has pledged to raise interest rates by a half-point each time it meets. If inflation continues to rise in the coming months, the Federal Reserve will have to keep its foot on the gas pedal for longer.
Following the data release, Treasury rates spiked, stock futures plummeted, and the dollar strengthened. Price increases for essentials continued at double-digit rates in May. Gas prices have reached fresh highs so far in June, indicating that inflationary pressure will continue to build in the future CPI figures, putting the Fed on edge. Fed’s June 15 and 16th meeting has sparked a wave of panic yet some hope among crypto investors. Meanwhile, the crypto market is already trading in red and all eyes are now set on the outcome of the upcoming meeting.