Market Wire, North America

The Federal Reserve’s preferred inflation measure climbed by slightly less than expected last month and underlying growth in the US economy remained robust in the second quarter, helping keep near-term expectations for the Federal Reserve’s policy trajectory intact. Monthly data released by the Bureau of Economic Analysis this morning showed the core personal consumption expenditures index rising 0.1% in June from the prior month, undershooting market forecasts for a 0.2% increase. On a year-over-year basis, core price growth decelerated to 3.3% from 3.4% previously, aligning with economist estimates. The overall personal consumption expenditures index fell -0.1% relative to the prior...

The Federal Reserve left interest rates unchanged and delivered its clearest signal yet that upside risks to inflation now outweigh downside risks to employment in Kevin Warsh’s second meeting as chair—a hawkish bias underscored by three votes in favour of an immediate hike. After two days of discussion, the Federal Open Market Committee voted 9–3 to maintain the target range for the federal funds rate between 3.50 and 3.75% for a fifth consecutive meeting. Lorie Logan, Beth Hammack, and Neel Kashkari, presidents of the Dallas, Cleveland, and Minneapolis Federal Reserve Banks respectively, cast the dissenting votes after making the case...

Underlying consumer price growth turned negative in the United States last month, smashing the case for an imminent rate hike from the Federal Reserve, and adding to the downward pressure building against the dollar. According to data published by the Bureau of Labor Statistics this morning, the core consumer price index—with highly-volatile food and energy prices excluded—fell -0.02% in month-over-month terms in June, slowing sharply from the 0.2% pace set a month earlier. This undershot all of the estimates provided by economists ahead of the release, and lowered the annual increase in prices to 2.6% from 2.9% previously. Softness was...