Inflation Setting Stage for Potential Fed Rate Cuts

Summary:
In June, the US saw a notable slowdown in inflation, marking the smallest increase since 2021. The core consumer price index (CPI), excluding food and energy costs, rose by just 0.1% from May. This deceleration, driven largely by a decrease in housing costs, indicates that the Federal Reserve may soon have enough confidence to begin cutting interest rates, likely starting in September. The overall CPI fell for the first time since the pandemic began, thanks to cheaper gasoline prices.

Federal Reserve Chair Jerome Powell and other policymakers are expected to signal potential rate cuts during their upcoming meeting in July. This development is seen as a positive sign for the real estate market, which has been heavily influenced by fluctuating interest rates. Additionally, President Biden has welcomed this news, viewing it as a significant step in controlling inflation. With traders now anticipating rate cuts in both September and December, the outlook for the commercial real estate sector appears to be brightening, potentially boosting investor confidence.

Our take (from the Straight to Smart newsletter):

Zeroing in on the Feds Inflection Point

Article Excerpt:

US inflation cooled broadly in June to the slowest pace since 2021 on the back of a long-awaited slowdown in housing costs, sending the strongest signal yet that the Federal Reserve can cut interest rates soon.

The so-called core consumer price index — which excludes food and energy costs — climbed 0.1% from May, the smallest advance in three years, Bureau of Labor Statistics figures showed Thursday. The overall measure fell for the first time since the onset of the pandemic, dragged down by cheaper gasoline.

Click to read original Bloomberg article (subscription may be required):
US Inflation Broadly Cools, Likely Sealing Deal for Fed Rate Cut

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