US CPI rise decides quantum of Fed’s rate hike

We reckon today's US markets continue to digest the policy implications from last night's FOMC meeting, CPI MoM is to increase at 0.5% from previous at 0.1% while Core CPI is forecasted to remain at 0.2%.

The US inflation data for May is likely to shed some light on key input into the discussion about rate policy, because all other economic parameters of US are reasonably placed in positively while an element of suspicion arises from inflation part.

While a revival of CPI inflation towards 2% over the medium term is expected by the Committee, the near-term profile has been expected to remain low.

However, today's announcement is most likely to present evidence that inflation has bottomed out in the US. Following the drop to -0.2% in April,

We look ahead to a bounce back in annual headline CPI to +0.1% due in part to higher petrol prices alongside the relative firmness of 'core' inflation which we expect to remain unchanged at 1.8% YoY.

In addition to that US unemployment claims are likely to reduce at 278k from previous at 279k.