Barclays expects US Fed to take cautious approach on rates despite May inflation data

Favorable US inflation data for May raised expectations that the Federal Reserve (Fed) would ease its stance on monetary policy. However, Barclays analysts do not believe last month's statistics are enough to prompt the US regulator to cut interest rates. The firm is confident that the consequences of Donald Trump's trade policies will soon accelerate consumer price growth.

Core inflation rose by only 0.13% in May compared to April, which is significantly lower than both Barclays' forecast and the market consensus. The slowdown was widespread and affected not only food but also services, according to Investing. The US producer price index showed positive dynamics as well. Now, market participants are waiting for the release of personal consumption expenditure data. They estimate that the May figure will rise by only 0.15%.

However, unlike many investors, Barclays experts were not convinced by the inflation data that the Fed is ready to continue cutting interest rates. The monetary policy meeting will take place tomorrow, on Wednesday.