US consumer prices hardly increased in May. Economists at Commerzbank analyze how the figures could influence the Fed decision due out tomorrow.

US inflation allows Fed to pause tomorrow

At first glance, US inflation is easing significantly. In May, consumer prices rose by only 0.1% month-on-month and 4.0% year-on-year, some five percentage points below the high. But underlying price pressures remain persistent, as evidenced by the core rate remaining high at 5.3%. 

While the Fed is unlikely to raise interest rates further tomorrow, it will not cut rates in 2023