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Fed may soon pause rate hikes as inflation eases

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Inflation in the U.S. eased in the previous month to its slowest pace in over two years, providing relief to Americans who have been grappling with a period of escalating prices

This development also increases the likelihood of the U.S. Federal Reserve refraining from further interest rate hikes, following an anticipated increase scheduled for this month.

According to the U.S. Labor Department, the consumer price index (CPI) rose by 3 percent in June compared to the previous year.

This figure represents a significant drop from the peak inflation rate of 9.1 percent observed in June 2022. Additionally, June’s inflation rate declined from 4 percent in May and was last close to 3 percent in March 2021.

However, it is important to note that inflation still remains above the Federal Reserve’s target of 2 percent.

The Fed has indicated its intention to raise interest rates to a 22-year high during its meeting on July 25-26, citing recent indications of stronger-than-expected economic activity.

The June inflation report is not expected to alter this outcome. At their previous meeting, officials opted to maintain the benchmark federal funds rate within a range of 5 percent to 5.25 percent, marking their first pause after ten consecutive increases since March 2022.

Most officials at the June meeting anticipated two more rate increases within the year.

Core consumer prices, which exclude the volatile food and energy categories, increased by 4.8 percent in June compared to the previous year.

This growth rate represents the slowest pace since October 2021 and a decrease from 5.3 percent in May.

Economists had previously estimated core prices to rise by 5 percent. Notable changes in specific categories included sharp declines in prices for used cars and airline fares, while prices for car insurance and recreation rose.

Rent saw an increase in June but at the slowest monthly pace since early 2022.

The Fed is primarily focused on curbing persistently high core inflation and considers it a better predictor of future inflation than the overall inflation rate.

Core inflation has been driven by rising car prices, strong demand for labour-intensive services, and an earlier surge in housing rental prices.

The market responded positively to the inflation figures, as they affirmed that the Federal Reserve is making progress in its efforts to control high inflation.

Stocks rose, and bond yields fell as a result.

Despite the Fed’s rate increases, the US economy has demonstrated resilience this year, defying predictions of an economic downturn.

Although hiring slowed in June, it remained strong, and unemployment rates remained historically low. The most recent estimate from the Atlanta Fed indicates that US economic output rose at an annual rate of 2.3 percent during the recently concluded second quarter.

 

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Why the meme-stock frenzy is unlikely to repeat

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GME shares surge 74%, but experts stress a meme-stock frenzy resurgence is unlikely due to fundamental differences in the company’s financial situation.

Australia’s budget unveils a second consecutive surplus of A$9.3 billion, prioritising the critical minerals industry and green energy initiatives to reduce reliance on Chinese supply.

Also, GameStop shares have surged 74%, but experts caution against expecting a repeat of the 2021 meme-stock frenzy. #featured #trending

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Why are airlines after the Biden Administration?

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Major airlines are taking legal action against the Biden administration over a newly implemented rule requiring them to disclose fees upfront.

On this episode of Hot Shots – Major airlines are suing the Biden Administration, AI-piloted fighter jets, SpaceX faces funding challenges, and Apple receives crushing feedback.

Ticker’s Ahron Young & Veronica Dudo discuss. #featured #trending

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The mounting pressure on Government spends

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Questions abound regarding the factors fueling this inflation surge in Australia and whether it correlates with the escalating government expenditures.

Concerns extend to how Chalmers navigates the mounting pressure amid discrepancies in spending allocations.

Moreover, as Australians grapple with the reality of rising living costs, the feasibility of cutting spending becomes a pressing issue. Additionally, amidst economic uncertainties, individuals seek guidance on managing stock market risks effectively. #Featured #Trending

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