The modest 0.1% m/m increase in core consumer prices in June, which left the annual core inflation rate unchanged at 1.7%, continues the recent run of soft inflation data. Earlier this week, Chair Janet Yellen reiterated that the Fed would “be monitoring inflation developments closely in the months ahead” and, on the basis of June’s data, it is getting harder for the Fed to continue claiming that this is a temporary drop-off.
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