Synopsis:

BofA provides an analysis of the upcoming US CPI report for May, predicting continued high inflation levels that may cause discomfort for policymakers. This forecast comes amid expectations for slight moderation but persistent pressure on core inflation metrics.

Key Points:

• Headline CPI Forecast: BofA anticipates a 0.3% month-on-month increase in headline CPI for May, with a year-on-year rate potentially ticking down to 3.4%. The headline NSA index is projected to reach 313.621.
• Core Inflation: Core CPI is also expected to rise by 0.3% month-on-month (0.28% unrounded), indicating a moderation from the first quarter's average of 0.37% month-on-month but still high enough to cause concern.
• Implications for Federal Reserve: The predicted levels of inflation are likely not sufficient to assure the Federal Reserve, suggesting continued vigilance in monitoring inflationary pressures.

Conclusion:

BofA's forecast for the May CPI underscores the ongoing challenge faced by the Federal Reserve in combating inflation, which remains above comfortable levels despite some signs of moderation. The report will be crucial for shaping monetary policy decisions, particularly if inflation metrics do not show significant easing.