US Inflation Eases Amid Middle East Tensions, Fed Remains Cautious

The US inflation rate slowed in June to 3.7% from 4.1% in May, but economists expect this easing to be temporary due to renewed hostilities in the Middle East and rising oil prices.

Brent oil prices are hovering just above $90 a barrel, while average U.S. gasoline prices have risen back above $4 a gallon, according to recent data from the Commerce Department's Bureau of Economic Analysis.

The PCE Price Index slipped 0.1% on a month-over-month basis in June, the weakest reading since April 2020, after climbing 0.5% in May.

Fed Chairman Kevin Warsh emphasized that the central bank would not 'waver' in its commitment to lower inflation back to target, reiterating that there is no soft inflation target.