On a day when the Federal Reserve's policy decisions are traditionally in focus, it was an early morning inflation report that offered the greatest indicator of the US central bank's near-term economic outlook.
Hours before chairman Jerome Powell faced reporters at the Federal Reserve building in Washington, the Labour Department reported inflation had slowed for a second straight month.
The Consumer Price Index report showed core inflation had risen 0.2 per cent from April to May, its smallest gain since October.
On an annual basis, core inflation rose 3.4 per cent, down from 3.6 per cent in April and 3.8 per cent in March.
But for Mr Powell, the CPI report was a case of too little, too late – at least for now.
“We welcome today’s reading and hope for more like that,” he said.
The Fed chairman demurred on whether the report would have any significant effect on the Fed's so-called dot plot, which showed officials scaling back their rate-cut projections this year from three to one.
Still, it was close, with eight officials forecasting one rate cut this year compared with seven who predicted two. Four officials pencilled in no rate cuts.
Mr Powell did not say if Wednesday's reading would have a significant effect on the Fed's rate-cut projections.
“What we said is that we want to make sure that we're confident that inflation is actually moving back down to 2 per cent," he said. "And when we are, then we can look at loosening policies.
“We're looking for something that gives us confidence that inflation is moving sustainably down to 2 per cent, and readings like today's, you know, that's a step in the right direction.”
He did caution that Wednesday's inflation reading was only one report.
But Wednesday's inflation report was celebrated by Fed watchers who hoped it showed that a surge in US consumer prices from earlier this year has come and gone.
“I would say that the CPI was overshadowed [by] what we learnt from a Fed that didn't change policy and happened to change the dot plot matrix a bit that was outside of consensus,” said Art Hogan, chief market strategist at B Riley Wealth.
“The CPI was the most important thing we've learnt today.”
Mr Hogan, who expects two rate cuts this year, believes Wednesday's reading alongside incoming data in the summer will deliver enough confidence for the Fed to begin cutting rates towards the end of this quarter.
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“I suspect that it will be a September and December rate cut and I think that will be driven by data,” he told The National.
“I think we'll have enough data by September meeting that the majority of the voting members of the FOMC [Federal Open Market Committee] will see that they've made significant progress towards their target."
Oxford Economics' lead US economist Nancy Vanden Houten also considers May's reading to be the first in a string of positive data for the Fed.
“We expect a string of more favourable inflation releases … will clear the way for the Fed to lower rates in September,” she wrote.
Wells Fargo economists also expect two rate cuts this year, suggesting Fed members need more evidence to be convinced that they are in a situation to cut US interest rates.
“It will be a close call between one or two 25 [quarter-point] rate cuts, and the committee seems evenly split between the two outcomes,” chief economists Sarah House and Michael Pugliese wrote to investors.
“While the May CPI report released earlier today was encouraging for the inflation outlook, the FOMC clearly needs to see more benign prints before a consensus emerges that a reduction in the fed funds rate is warranted.”
