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Josh Nye, senior economist at Royal Bank of Canada, notes that the US headline CPI index rose 0.3% month-over-month in April, lifting the year-over-year rate to a five-month high of 2.0%.

Key Quotes

“Core inflation was up just 0.1% month-over-month, but the year-over-year rate still ticked higher to 2.1%.”

“US dollar appreciation to the tune of 6% is likely a factor there. As with PCE, measures of CPI that filter out such idiosyncratic price movements point to a steadier inflation trend than the standard headline and core measures suggest. That supports Powell’s view that the recent slowdown in inflation should ultimately prove transitory. But for the time being, inflation readings give the Fed little reason to deviate from their “patient” mantra.”