Navigating the Impact of Cooling Inflation on the US Stock Market

Inflation in the US is expected to continue cooling in June, but the core Consumer Price Index (CPI) is still rising at a pace that keeps the Federal Reserve inclined towards resuming interest rate hikes. The headline CPI is forecasted to climb 3.1% from a year ago, the smallest increase since March 2021, largely due to lower gasoline prices. However, the core CPI, which excludes volatile energy and food costs, is projected to rise 5% from a year ago, more than double the Fed's target. Other economic reports to watch include the June producer price index and the University of Michigan's preliminary July consumer sentiment index. The Bank of Canada is also set to unveil new economic forecasts and the Bank of England will release an assessment of system risks and stress tests.