We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.

Trader Warren Meyers watches the Fed Rate announcement on the floor of the New York Stock Exchange
For background, the Fed has been bumping up rates since March 2022, when pandemic-related stimulus and supply chain kinks were driving annual price growth towards 9%, a 40-year high.
But these days things are looking rosier. The latest data show annual price growth in May was just 4%, almost a full point below April’s clip. It’s the 11th consecutive month that inflation has fallen.
Falling energy prices, down nearly 12%, played a major role. And that’s despite Saudi Arabia’s recent decision to cut oil output by 1M barrels a day. Oil prices have actually fallen since then, as other petrostates keep pumping flat out, while the post-COVID economic recovery of China — the world’s largest oil importer — remains sluggish.
All of that leaves room for the Fed to hold rates. But if so, the reprieve may be short: Core inflation, which excludes fuel and food prices, is still above 5% — a long way from the pre-pandemic average of about 2%. Even if the Fed stands pat, it may still have to hit the hiking trail again at its next meeting in July.