Inflation continues to slow in the U.S., opening door to Fed rate cut

Price increases in the U.S. slowed more sharply than expected in June, adding to evidence that high inflation has subsided and potentially clearing the way for the Federal Reserve to lower a key interest rate that influences everything from mortgages to credit card payments.

The Consumer Price Index rose 3% year over year in June — and declined by 0.1% from May. That compares with a 3.3% annual reading last month.

The report will only add to hopes that the Federal Reserve will cut interest rates this fall, a move meant to offset slowing economic growth. In remarks to Congress this week in advance of Thursday's report, Fed Chair Jerome Powell said the central bank wanted to see more progress that inflation was slowing before it made a change to interest rates, saying it was looking for “more good data.”

The unexpectedly good data contained in Thursday's report may be just what they were looking for.