Headline inflation rose 0.5% in May, meeting expectations, while a cooler-than-expected core reading—excluding food and energy—helped steady market sentiment.
The U.S. inflation report came in broadly in line with forecasts, reinforcing expectations that the Federal Reserve will hold its policy rate in the 350–375 bps range at its June 17 meeting, though markets still price in a potential 25 bps hike by year-end.
Data from the Bureau of Labor Statistics showed the Consumer Price Index increased 4.2% year-over-year in May, matching economist estimates and accelerating from 3.8% in April.
On a monthly basis, CPI rose 0.5%, as expected, and slightly cooled from April’s 0.6% gain. Core CPI, which excludes food and energy, increased just 0.2%, below forecasts of 0.3% and down from 0.4% previously. Year-over-year core inflation came in at 2.9%, in line with expectations and up slightly from 2.8% in April.
Bitcoin (BTC) edged higher after the release but remained largely muted, trading just above $61,000 and flat on the day.
Broader markets were softer, with U.S. stock futures declining across the board. The 10-year Treasury yield climbed toward 4.5%, while WTI crude oil extended losses, falling another 1% to around $88 per barrel.
Ahead of the report, markets were already pricing in a 98% probability that the Federal Reserve would keep rates unchanged at its June meeting, according to the CME FedWatch Tool.
