Rate-Hike Odds Slump As US Consumer Prices Plunge Most Since COVID In June

The odds of a rate hike have diminished as US consumer prices saw their steepest decline since the COVID-19 pandemic in June, dropping 0.4% month-over-month (MoM). This unexpected significant drop, well beyond the anticipated 0.1% MoM decrease, was largely driven by a substantial fall in energy costs. This substantial cooling in inflation—bringing the year-over-year (YoY) change to 3.5%—could influence the Federal Reserve's future monetary policy decisions, potentially making it less likely for an interest rate increase in the near term. The divergence in price trends for goods and services adds complexity to the economic outlook.