INFLATION UPDATE

JUNE 14, 2024 – Well, the May report is in, and it clocked a 3.3% inflation rate, just a hair below my forecast of 3.4%-3.6% and the consensus estimate of 3.4%. Meanwhile, the 3-month annualized inflation rate is holding steady at 5.0%, and the 6-month rate is at 4.6%. These numbers are higher than the annualized rate of 3.3%, signaling that we’re likely to see the annual CPI stick around these levels or even climb a bit higher for the foreseeable future. Next month’s reading is predicted to land between 3.3% and 3.4%, but I’m betting it’ll come in a tad lower.

Remember my prediction from last month about the Fed’s December statement? They had high hopes of lowering interest rates three times in 2024, which seemed pretty optimistic. The market was more cautious, expecting just one reduction, maybe in September or December. Following the market’s lead, the Fed has now revised their statement, hinting at just one rate cut before the year wraps up.

Here’s my take: although the Fed publicly aims for a 2% CPI target, it sure seems like they’re content with it hovering in the 3.0-3.5% range. Intentional? You bet.

Shalom,
The Mann