Hottest Inflation In Over 3 Years: Is The Fed Ready To Hike Interest Rates?

U.S. inflation reached its highest level in over 3 years in May, with CPI rising 0.5% monthly and 4.2% year-over-year, driven primarily by Iran-related energy shocks. Despite the elevated inflation reading, economists expect the Federal Reserve to hold rates steady at its June 17 meeting while signaling a more hawkish stance. Market pricing shows a 98% probability of a rate hold, though futures suggest a 25-basis-point hike is possible by December. The S&P 500 declined 1.3% on the day, falling over 4% from recent record highs.