MetroIntelligence Economic Update by P. DUFFY
Fed pauses rate hikes, revises economic projections
As expected, although the Federal Reserve did opt to keep interest rates higher for now, its revised economic projections also show more stubborn core inflation, prompting higher Federal Funds rates through 2025 than forecast in March. The new projections show the Federal Funds rate for 2023 rising from 5.1% to 5.6% (signaling further hikes ahead this year), falling to 4.6% in 2024 (up from 4.3% in March) and 3.4% in 2025 (up from 3.1% in March).
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20230614.pdf
Consumer sentiment rebounds 8 percent in June, up 28 percent year-on-year
Consumer sentiment lifted 8% in June, reaching its highest level in four months, reflecting greater optimism as inflation eased and policymakers resolved the debt ceiling crisis. The outlook over the economy surged 28% over the short run and 14% over the long run. Sentiment is now 28% above the historic low from a year ago and may be resuming its upward trajectory since then. As it stands, though, sentiment remains low by historical standards as income expectations softened. A majority of consumers still expect difficult times in the economy over the next year.
May Producer Price Index up 1.1 percent year-on-year, lowest since Dec. 2020
The Producer Price Index for seasonally adjusted final demand declined 0.3 percent in May after rising 0.2 percent in April and falling 0.4 percent in March. On an unadjusted basis, the index for final demand moved up 1.1 percent for the 12 months ended in May, the lowest annual increase since December 2020.
https://www.bls.gov/news.release/ppi.nr0.htm
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May CPI rises 4.0 percent year-on-year, lowest since March 2021
The Consumer Price Index for All Urban Consumers (CPI-U) rose just 0.1 percent in May on a seasonally adjusted basis, after increasing 0.4 percent in April, 0.1 percent in March and 0.4 percent in February. Over the last 12 months, the all items index increased 4.0 percent before seasonal adjustment, the smallest increase since March 2021.