Consumer price index unchanged in May
CPI increases 3.3 on yearonyear basis
Core CPI rises 0.2; up 3.4 on yearonyear basis

WASHINGTON, June 12 Reuters U.S. consumer prices were unexpectedly unchanged in May as cheaper gasoline and other goods offset higher costs for rental housing, but inflation remains too high for the Federal Reserve to start cutting interest rates before September.

The report from the Labor Department on Wednesday also showed underlying inflation pressures abated significantly last month, with the cost of motor vehicle insurance declining on a monthly basis for the first time since the fourth quarter of 2021. The data prompted financial markets to boost the probability that the U.S. central bank would cut rates in September as well as in December.

Policymakers on Wednesday, however, projected only a single quarterpercentagepoint reduction in borrowing costs, with the easing cycle possibly not starting before December.

They left the Fed39;s benchmark overnight interest rate unchanged in the current 5.255.50 range, where it has been since July, and slightly raised the inflation forecast for 2024.

Most economists continued to expect two rate cuts, starting in September, arguing that inflation had turned the corner after surging in the first quarter.

If we continue to receive tame monthly inflation readings in the coming months, the Fed could start to cut rates in September and follow up again in December with another reduction, said Kathy…