Market Wire, North America

The Federal Reserve left interest rates unchanged, stripped forward guidance from its communications, and signalled a dramatic hawkish shift in its reaction function at Kevin Warsh’s first meeting as chair—confounding expectations for a smooth transition from the Powell era. In significant revisions to the statement, officials removed anything resembling a forward policy outlook, including the easing bias that had previously drawn dissents from three regional governors. In an extraordinarily-brief passage, the committee described economic activity as expanding at a solid pace despite elevated uncertainty tied in part to the Middle East conflict, pointed to strong productivity growth and capital investment,...

Annual headline inflation hit a three-year high in the United States last month, but decelerated slightly on a monthly basis while a measure of underlying price pressures eased—averting a widely feared intensification and reinforcing the case for the Federal Reserve to hold rates steady. The Bureau of Labor Statistics’ consumer price index rose 0.5% in May, slowing from April’s 0.6% gain. On a year-over-year basis, prices climbed 4.2%, up from 3.8%, as rising energy costs from the Iran conflict continued to feed through. The reading matched the consensus forecast. Core inflation—more important from a monetary-policy standpoint—remained more restrained, as softening...

Underlying consumer prices climbed by slightly more than expected in the United States last month, reinforcing the case for a tightening bias from the Federal Reserve, and putting modest upward pressure on 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—climbed 0.4% month-over-month, rising from the 0.2% pace set a month earlier, and was up 2.8% year-over-year. This topped consensus estimates among economists polled by the major data providers ahead of the release, which were set closer to the 2.7% mark. Headline prices rose...