Yahoo Finance’s Jennifer Schonberger reports:
A cooler-than-expected inflation reading from May is not likely to shake the view of most Federal Reserve policymakers that rates should stay on hold until there is more clarity about the impact from President Trump’s tariffs.
Some economists were expecting to see higher costs from those tariffs showing up in the Consumer Price Index (CPI) report released Wednesday, but instead CPI showed that inflation pressures were relatively stable and even eased on a monthly basis.
The “core” measure of CPI, which excludes volatile food and energy costs, rose 2.8% over the past year in May, matching April. Monthly core prices increased 0.1%, a touch below April’s 0.2% gain.
Economist Claudia Sahm, founder of Sahm Consulting, told Yahoo Finance that the May report doesn’t “necessarily tell us where we are headed by the end of the year,” and “I don’t think we have a picture yet of what the costs are from the current” Trump administration trade policy.
But what this does, she added, is delay the Fed’s ability to conclude that any tariff price increases are in fact temporary — a conclusion that would allow it to start cutting rates again.
This “may mean we delay the rate cuts.”
