The BLS released the latest data on inflation, the personal consumption expenditures price index for April 2023 today. Inflation rose by 0.4% last month, an increase of 4.7% compared to a year ago.
Right after the report was released the CME's Fedwatch tool quickly rose to a 70.5% chance that the Fed will raise rates by a quarter percent at the June FOMC meeting. A far cry from recent statements by Chairman Powell at a Fed in mid-May. The chairman said that the central bank terminal rate has become elevated to a point where its effect on consumers and businesses is high enough to restrain borrowing spending and contract economic growth.
Just one week ago the CME's FedWatch tool predicted that there was a 17.4% probability that the Federal Reserve would raise rates at the next FOMC meeting in the middle of June. Just yesterday the probability climbed to 51.7% and is now at 70.5%. One week ago it was predicting an 82.6% probability that the Federal Reserve would enact its first rate hike pause in 15 months.
Add to that it seems as though actions by the Federal Reserve are lowering inflation two steps forward as the report reveals inflation is taken two steps back.