Inflation jumped to a 4.2 percent annual rate in May, the highest since 2023, putting the Federal Reserve under renewed pressure to consider a rate hike later this year as energy‑driven price increases ripple through the broader economy. The Consumer Price Index excluding food and energy rose 2.9 percent, keeping inflation materially above the Federal Open Market Committee’s 2 percent target. With the U.S. jobs market still performing well on recent data, fixed‑income markets are increasingly pricing in the possibility of Fed action later this year.

Recent Inflation Data

Inflation ran slightly above the Fed’s target before March 2026. Now, with the effective closure of the Strait of Hormuz to trade for several months, prices have moved higher since March. Energy........

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