The Inflation Outlook and Fed Policy under New Leadership

From am.jpmorgan.com Watch this video at https://www.metalsmine.com/news/1403637-the-inflation-outlook-and-fed-policy-under-new.

Last Wednesday’s CPI report, while not a surprise, still showed a year-over-year inflation rate of 4.2% - higher than in any month since April, 2023. For investors, this raises a number of questions. First, is this the peak for U.S. inflation and, if it is, how fast will inflation fall from here? Second, are we looking at the right inflation rate, anyway, given differences between CPI and PCE deflators, headline and core measures and the new Fed Chairman’s preference for trimmed mean and median readings? Finally, what does the inflation outlook imply for this week’s Fed decision and the direction of monetary policy and interest rates? Consumer prices rose by 0.47% in May, resulting in a year-over-year increase of 4.17%. Most of this gain, (0.28% to be exact), was due to a 7.0% jump in gasoline prices. However, the inflation story was more mixed elsewhere, boosted by gains in electricity prices, tobacco prices and airline fares, but restrained by reported declines in the prices of new vehicles, medical commodities and auto and health insurance.