At 3% in June, inflation is now only one-third of the level recorded 12 months ago, which was the highest in the past 40 years. The data from last month also exceeded expectations.
However, this does not imply that the battle against price pressures has concluded, especially for the Fed, which has hinted at raising rates once again by the end of the month. Although there is a possibility that the increase on July 26th may be the last for a long period of time.
The U.S. stock markets showed optimism after the inflation data for June turned out better than anticipated, with both the general and core indexes advancing by 0.2% for the month, while forecasts had projected 0.3%.
The Nasdaq Composite (CCMPDL) led the gains of the day, rising by 1.15%, while the S&P 500 gained 0.74% and reached its highest level since April 2022, at 4,472.16 points. The Dow Jones Industrial advanced by 0.25% following the release of the price data.
"Here the stakes change a bit, and we could be thinking that the cycle of interest rate normalization in the U.S. is approaching, maybe one more move, but they could be avoiding a second move," explained David Cubides, Director of Economic Research at Alianza Valores, to Bloomberg Línea.
The price data marked a two-year low for core inflation, which excludes energy and food, reflecting the results of the Federal Reserve's restrictive policy. The year-over-year figure was 4.8%, although one of the key reasons for the deceleration is that it is compared to June 2022, a few months after the start of the Russia-Ukraine war.
Among the notable results of the day in mega-cap companies were Nvidia Corp. (NVDA), which rose by 3.57%, and Meta Platforms Inc. (META), which advanced by 3.70%.
"The data on inflation continuing the deceleration process, combined with recent employment and unemployment data from last week showing some cooling in the margin of the labor market, diminish the chances of a very tight monetary policy. However, today the likelihood of a future rate hike (0.25 bps) by the Fed is above 90%," wrote Maximiliano Donzelli, Head of Research at IOL invertironline, referring to the upcoming Fed meeting scheduled for July 25th-26th.
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