US inflation cooled more than expected in June 👍
Headline inflation fell to 3.5% in June, down from 4.2% in May–and below the 3.8% economists were expecting.
Core inflation (which strips out volatile food and energy prices) fell to 2.6%, down from 2.9% in May, also beating forecasts of 2.8%.
This takes some heat off the Fed. Markets had been bracing for a possible rate hike, and this data lowers the odds of one at the July meeting. But at 2.6%, core inflation is still well above the Fed's 2% target, so a hike isn't off the table yet, just less likely for now.
Markets liked the news. The S&P 500 closed up 0.38%, the NASDAQ climbed 0.90%, and the VIX (Wall Street's "fear gauge") dropped 3.85%.
Why this matters
When inflation surprises to the downside, it lowers the odds of the Fed tightening policy further. Less fear of a rate hike means less uncertainty for markets–and markets tend to perform better when there's less uncertainty hanging over them.
It also matters for businesses. Interest rates have stayed high for months now. Every report that reduces the chance of rates going even higher makes it a little easier for companies to plan, borrow, and invest with confidence.
Source of Data: Link
1July 16, 2026 121
