Released yesterday, the latest U.S. inflation numbers show that year-over-year price growth came in at 3.3% in May, down a tenth of a percentage point from the 3.4% reading in April.

That’s still well above the 2% target, but the gist of the May numbers (including the various core measures) is that U.S. inflation seems to be heading in the right direction after some unexpected increases earlier in the year.

June’s inflation numbers could shift things again, but for now, the sense is that U.S. inflation, while sticky, is cooperating and that interest rates are restrictive enough to keep it on the path to 2%.

The other big economic news yesterday was the decision by the U.S. Federal Reserve to leave its key interest rate unchanged for now.

What’s more, Fed officials are now projecting just one rate cut in 2024, down from multiple cuts in its previous projection.

The Fed remains cautious and “data dependent” with Federal Reserve Chair Jerome Powell saying at the news conference that "we want to see more good data to bolster our confidence that inflation is moving sustainably toward 2%."

Yesterday’s decision reinforces the “higher for longer” outlook for U.S. borrowing costs and puts U.S. and Canadian monetary policy on different tracks with the Bank of Canada announcing an initial cut to its policy rate last week.

Tomorrow’s Weekly Wrap will explore what the Fed’s “dot plot” reveals about where U.S. interest rates are headed and the divergence between U.S. and Canadian monetary policy.

Answer to the previous trivia question: Banff was home to one of the two buildings in Canada designed by Frank Lloyd Wright. The Banff Pavilion was demolished in 1938 after being damaged in a flood.

Today’s trivia question: In what year was the U.S. Federal Reserve’s “dual mandate” of promoting maximum employment and stable prices adopted?