U.S. consumer prices were unexpectedly unchanged in May as cheaper gasoline and other goods offset higher costs for rental housing, but inflation remains too high for the Federal Reserve to start cutting interest rates before September.
The report from the Labor Department on Wednesday also showed underlying inflation pressures abated significantly last month, with the cost of motor vehicle insurance declining on a monthly basis for the first time since the fourth quarter of 2021. The data prompted financial markets to boost the probability that the U.S. central bank would cut rates in September as well as in December.
Policymakers on Wednesday, however, projected only a single quarter-percentage-point reduction in borrowing costs, with the easing cycle possibly not starting before December.
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