US CPI Preview: Inflation continues to drift lower - Wells Fargo

Analysts from Wells Fargo, expected that on Friday, US infaltion data will show that the CPI rose 0.1% on June, in line with market consensus. 

Key Quotes: 

“Inflation measures have come in below expectations in recent months, and prices declined in May in both the CPI and the PCE deflator. Year-over-year comparisons continue to drift lower from the Fed’s 2 percent target. Transitory factors are certainly at play, including lower gasoline prices and wireless cell phone plans, though weakness has broadened into core price categories as well.”

“Apparel, transportation and medical care all posted lower readings in May. The weakness in the core CPI trend is evident in the three-month annualized pace, which fell to zero in May.”

“Continued misses from incoming inflation data prompted us to reevaluate our outlook for monetary policy moves through the end of the year. We moved our call for the next funds rate hike from September to December, and expect the FOMC to initiate balance sheet reductions in September.”