The US Federal Reserve is expected to pause further interest rates hikes on Wednesday, especially after inflation eased to a two-year low last month.
Rates are expected to be kept at 5.25%, with chair Jerome Powell strongly hinting back in the last meeting, in early May, that after raising rates from near zero over the past 14 months, policymakers could pause this month.
Initially, this led to markets anticipating rate cuts for later in the year, before subsequent economic data showed inflation continuing to run hot and the jobs market remaining solid.
Furthermore, Australian and Canadian central banks surprisingly hiked rates last week.
Then, yesterday US inflation data showed price rises eased more than expected in May, falling to more than two-year low.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said the data has "shown clearly that the Fed needs to take summer off now with respect to their monetary policy".
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he thinks the Fed has now finished with its current cycle of policy tightening, but said it could be "close", depending on how economic data comes out in the coming few months.
Some other economists saw things differently, with Paul Ashworth at Capital Economics saying core price inflation is still high and rising on the month, meaning “the Fed is likely to signal tomorrow that it is minded to hike interest rates at the late-July FOMC meeting”.
The biggest effects driving core CPI were rents and used car prices, said Shepherdson, which are predicted to fall over the summer, meaning the pause from the Fed could be a lasting one.