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Friday, June 21, 2024

Inflation Falls Towards The Federal Reserve’s Inflation Goals

Key Takeaways:

  • If inflation continues to trend downward, it could lead to lower interest rates in the future.
  • Financial markets reacted positively to the news, with the S&P 500 rising 1.05% on the day.
  • Retail sales showed a more significant slowdown than anticipated.

Inflation and Retail Sales Data

The latest economic data released on May 15, 2024, shows inflation decreasing which could lead to the Federal Reserve lowering interest rates. The inflation rate for April came in at 3.4% year-over-year, matching the consensus expectation and down from the previous month’s 3.5%. The core inflation rate, which excludes volatile food and energy prices, also met expectations at 3.6% year-over-year.

Retail sales showed a more significant slowdown than anticipated. Retail sales remained unchanged from the previous month, falling short of the 0.4% growth expected. However, retail sales excluding autos grew by 0.2%, in line with expectations.

The falling inflation rate is a positive sign for the Federal Reserve, which has been working to bring inflation down to its 2% target. If inflation continues to trend downward, it could lead to lower interest rates in the future, providing relief for borrowers and stimulating economic growth.

Market Reaction

Financial markets reacted positively to the news, with the S&P 500 rising 1.05% on the day. The U.S. dollar fell by 0.62%, while gold prices increased by 1.24%, possibly reflecting investor expectations of lower interest rates and a weaker dollar in the future. Oil prices remained unchanged from the previous day.

S&P 500 1-Minute Price Data
DXY 1-Minute Chart

The Federal Reserve’s recent statement on May 1, 2024, indicated that the central bank would maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent until inflation is moving toward 2%. The slowing inflation rate and retail sales data suggest that the economy is moving in the right direction, but the Federal Reserve will likely remain cautious.

Lazarus
Lazarushttps://ljlnews.com
Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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