June Fed Meeting: Live Updates and Commentary

The labor market remains resilient

The Federal Reserve has a dual mandate of price stability and maximum employment – and both sides appear to be on solid footing at the moment.

Indeed, while the May Consumer Price Index signaled progress on the inflation front, the most recent jobs report showed a resilient labor market.

According to the Labor Department, the U.S. added 139,000 new jobs last month, more than economists expected. And while figures for March and April were revised down, the unemployment rate remained at a historically low 4.2%.

“It’s clear that the economy remains resilient, with the job market holding up well,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.

The CIO added that the Fed “should be reluctant to cut rates because the full effects of tariffs haven’t impacted inflation numbers yet and the job market isn’t deteriorating enough to force their hand.”

– Karee Venema

President Trump’s tariff policies have yet to impact inflation

Inflation eased more than expected in May, according to the Bureau of Labor Statistics.

Headline CPI was up 0.1% month over month in May, slower than April’s 0.2% rise and the 0.2% increase economists expected.

The CPI was 2.4% higher year over year, slightly higher than the 2.3% increase seen the month prior and in line with economists’ projections.

Shelter was the “primary factor” for the increase in headline CPI, according to BLS, up 0.3% on the month. Energy costs, meanwhile, were down 1% in May as gas prices declined.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.1% from April to May and 2.8% year over year. Economists expected 0.3% and 2.9% increases, respectively.

The May CPI report, alongside news that the U.S. and China have reached a trade deal, is doing little to move the needle on rate-cut expectations.

According to CME FedWatch, futures traders are pricing in a 99.9% chance the central bank will hold rates steady, with the first quarter-point rate cut not expected until September.

– Karee Venema