Inflation report 'fuels hope' the Fed will cut interest rates this year

A surprisingly positive inflation report for May is fueling "hope" that the Federal Reserve will cut interest rates later this year, a move that President Donald Trump openly has wanted.

Inflation was put by federal estimates at 2.4%, up fractionally from the 2.3% from April, but still below expectations.

"President Trump has made no secret of the fact that he would like the Federal Reserve to cut interest rates," Nicholas Hyett, investment manager at Wealth Club, told the Daily Mail.

"On the face of it these numbers should ease some of the inflationary worries… the challenge is that while inflation isn't rising as fast as expected, it isn't falling either," Hyett explained.

Inflation was in the low single digits when Joe Biden took office four years ago, but exploded to as high as 9% percent under his failed economic policies.

Inflation was one of the issues on which Trump campaigned for his second term.

The report triggered a surge in stock market prices.

"Longer term there's still concerns about Trump's tariffs being inflationary but this report was better than expected and it fuels hope that the Federal Reserve will be able to step in with rate cuts later on this year," Robert Pavlik, of Dakota Wealth, told the Mail.

Analysts had been expecting a number closer to 3%.

Numbers from the Department of Labor Statistics surprised some economists who thought Trump's tariff battles, intended to bring American consumers and American businesses both a more fair world trade market presence, would have a more inflationary impact.

Major retailers, like Walmart, have said they are raising prices to cover the tariff costs.

"However, the latest report shows that other major consumer prices are down, including smartphones which fell 1.6 percent and airline fares down 2.7 percent from the month before," the report said. "Traders now believe there is a 75 percent chance the Federal Reserve will cut interest rates by September, compared to 60 percent yesterday, Bloomberg reported."

The White House took a victory lap, "Since President Trump took office, inflation has come in below economists' expectations every single month."

Trump has said it will be the "new Golden Age with lower costs, higher pay, and economic opportunity for all."

The White House said, "Under President Trump, core inflation has tracked at just 2.0% on an annual basis – levels not seen since the first Trump administration, when prices were low and stable. … In May, real wages for production and nonsupervisory workers saw the highest monthly increase in nearly a year — rising each month since President Trump took office and up nearly 2% over last year. The average private sector worker is on track to see their real earnings increase by around $1,200, adjusted for inflation."

Responses from the networks:

CNN's Matt Egan: "We got ANOTHER month of positive inflation news. Despite these historic tariffs, the latest numbers do show that inflation remained relatively tame in May … This was better than expected … We did see a drop in energy prices. In particular, gas prices were low."

CNBC's Mike Santoli: "There's no way to look at these numbers and say they're not welcome news."

Fox Business Network's Maria Bartiromo: "That is much better than expected."

The consumer price index is a broad measure of the prices of everyday goods.

"The inflation data this year has been terrific — a welcomed change from the prior four disastrous years," EJ Antoni, chief economist for the Heritage Foundation, told the Daily Caller News Foundation. "This bodes very well for the overall economy and indicates that we're headed to the 2.0% inflation target of the Federal Reserve. The Trump administration deserves tremendous credit here because their efforts to reduce government spending while increasing future energy production have reduced input prices throughout the economy, putting downward pressure on consumer prices. What a difference a president can make!"

The CPI report comes after the U.S. economy added 139,000 nonfarm payroll jobs in May, slightly above economists' expectations — while the unemployment rate remained unchanged at 4.2%, the BLS reported on June 6.