Key facts
- US annual inflation rate for May came in at 3.3%, lower than the 3.4% forecast.
- Core inflation, excluding food and energy, also slowed.
- The Federal Reserve decided to maintain its federal funds rate at the current target range.
- Federal Reserve officials now anticipate only one rate cut in 2024, down from previous projections of three.
- The central bank stated that future monetary policy decisions will be guided by incoming economic data.
The U.S. annual inflation rate for May registered at 3.3%, a slight deceleration from the previous month and below economists' expectations of 3.4%. This cooling inflation data was released as the Federal Reserve concluded its June policy meeting.
The Federal Reserve announced its decision to maintain the federal funds rate at its current target range, holding steady on borrowing costs. This decision comes amid mixed economic signals and the ongoing effort to bring inflation back to the central bank's 2% target.
In its updated economic projections, Federal Reserve officials indicated a shift in their outlook for interest rate reductions. The median projection now suggests only one rate cut may occur in 2024, a reduction from the three cuts anticipated in the March projections. This revised forecast underscores the Fed's cautious approach, emphasizing that future monetary policy adjustments will be contingent upon the evolving economic landscape and incoming data.