Price passthrough showing up at the checkout

US inflation data is likely to give dovish policymakers pause for thought at next week’s FOMC meeting, arriving hot on the heels of another solid employment report.

The Bureau of Labor Statistics (BLS) reported on Wednesday that headline CPI rose 4.2% y/y in May, matching forecasts and accelerating four-tenths from April. On a monthly basis, prices increased 0.5%, in line with expectations, but a tenth slower than the previous month.

Core CPI, which excludes food and energy, rose 2.9% y/y, also matching consensus estimates and edging higher from the prior reading.

Inflation has remained elevated for a third consecutive month, averaging 0.7% m/m since the outbreak of the conflict and the sharp reduction in shipping through the Strait of Hormuz. That pace equates to roughly 8.0% on an annualised basis. (LiveSquawk – Continue Reading)

Euro area central bankers have raised their key interest rates amid accelerating price growth, but the next steps for the public lender have become even more unclear.

As expected, officials increased the bank’s key rates by 25 basis points, which pushed the benchmark deposit rate to 2.25%. The hike was the first since September 2023.

Speaking to LiveSquawk News ahead of Thursday’s decision, Carsten Brzeski, head of macro at ING Bank, said a 25bp rate hike would be “symbolic” and do little to affect inflation in the single currency area. He noted that earlier on Thursday, ING announced it was changing its expectations for ECB rates to two hikes this year from the previous forecast for a single increase due to the acceleration of consumer price growth.

Expectations among traders echoed ING’s newly revised outlook for a second increase this year. (LiveSquawk – Continue Reading)

President Donald Trump said he cancelled planned military strikes against Iran, a stark reversal that came just hours after he vowed to hit the Islamic Republic “VERY HARD” and threatened to seize its oil infrastructure.

Trump on Thursday cited what he said were “discussions” that “have been brought to the highest level of Iranian leadership” surrounding a negotiated end to the war. He said that a “time and place of the signing” would “be announced shortly,” without providing further details. (Bloomberg – Continue Reading)

Iran has been preparing for months for a US operation to take control of Kharg Island, which President Donald Trump threatened to attack on Thursday.

CNN reported in March, shortly after US military strikes on the island, that Iran has laid traps and moved additional military personnel and air defenses to Kharg.

Iran’s build up of its defenses has included moving additional shoulder-fired, surface-to-air guided missile systems known as MANPADs to the island, sources previously told CNN. (CNN – Continue Reading)