US inflation predictions reach their highest level in two weeks
US inflation expectations, as measured by the 10-year breakeven inflation rate as reported by the St. Louis Federal Reserve (FRED), increased for the fourth consecutive day as of the close of the North American session on Tuesday.

US inflation expectations, as measured by the 10-year breakeven inflation rate as reported by the St. Louis Federal Reserve (FRED), increased for the fourth consecutive day as of the close of the North American session on Tuesday.
In spite of this, the inflation rate increased from 2.63 percent to 2.64 percent amidst hawkish Fed comments and generally positive US statistics.
The US dollar rebounded from a multi-day low on Tuesday due to hawkish Fed comments and positive US statistics. Christopher Waller, a member of the Fed Board of Governors, stated that he favors raising interest rates by an additional 50 basis points at the next several Fed meetings and that the policy rate should be above neutral by the end of the year in order to lower demand, as reported by Reuters. In contrast, the US Chicago Purchasing Managers' Index and CB Consumer Confidence surpassed expectations for May, while the Dallas Fed Manufacturing Business Index fell to its lowest level in two years.
Notable is the difference between the rise in inflation expectations and the weaker May readings of the Fed's favored inflation indicator, the US Core PCE Price Index. However, the most recent remarks by US Treasury Secretary Janet Yellen underline inflation risks and hint to future Fed policy tightening.
The combination of greater inflation predictions and worries of rising pricing pressure may help the US dollar extend its rebound from Tuesday's monthly low.
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