US inflation cools on brief ceasefire but Fed keeps rate hike option
World

US inflation cools on brief ceasefire but Fed keeps rate hike option

Economy World



US consumer inflation slowed more than expected in June as energy prices retreated, but the moderation was insufficient to convince financial markets to take an interest-rate increase from the Federal Reserve this year off the table against the backdrop of renewed conflict in the Middle East.

The Consumer Price Index (CPI) from the Labour Department on Tuesday also showed underlying inflation subsiding last month amid declines in the costs of motor vehicle insurance, communication, apparel, healthcare as well as used cars and trucks.

Fed Chair Kevin Warsh in prepared remarks to lawmakers on Tuesday said the US central bank had “no tolerance for persistently elevated inflation”.

“We share a resolute commitment to restoring price stability,” he added.

The new chairman has emphasised policymakers’ commitment to tackling inflation since he took office in May, and said the No 1 objective is to get monetary policy right.

“If we get policy right – and we will – the inflation surge of the last five years will be a thing of the past,” Warsh told the House Financial Services Committee.

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