Analyst: The US June monthly inflation rate is expected to decline by 0.2% due to a sharp drop in gasoline prices.

Investinglive analyst Eamonn Sheridan said the U.S. June Consumer Price Index (CPI) is expected to fall 0.2% month-on-month, the first decline since the pandemic, driven entirely by a 15% drop in gasoline prices from mid-May to the end of June. The annualized inflation rate is projected to slow from 4.2% in May to 3.8%. Core CPI is forecast to rise 0.2% month-on-month, with the annualized core inflation rate only edging down slightly from 2.9% to 2.8% in May. This means that even if headline inflation data improves nominally, the Federal Reserve has almost no basis to ease policy. This poses a dilemma for Waller, who is set to appear at a congressional hearing for the first time this week: he must demonstrate resolve to curb inflation without appearing overly hawkish, which would lead to excessive tightening of credit conditions. Meanwhile, the fragile Middle East ceasefire has brought two-sided risks to the energy price outlook, and this balance largely depends on how the Middle East situation evolves and its impact on oil prices. (Jin10)