May's Consumer Price Index (CPI) report showed inflation pressures eased on a monthly basis despite investor concerns that tariffs would accelerate the pace of price increases.

The latest data from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) increased 0.1% month over month, below April’s 0.2% rise and lower than economists' estimates of a 0.2% monthly gain in prices.

On an annual basis, the CPI rose 2.4% in May, a slight uptick from Aprils’ 2.3% gain, which marked the lowest yearly increase since February 2021. That year-over-year number was in line with the 2.4% rise expected by economists surveyed by The Wall Street Journal.

Although inflation is still above the Fed’s 2.0% target, given the lags in monetary policy and slow growth of the money supply, which can be a sign of potential economic slowdown, it might be time for the Fed to consider reducing short-term rates slightly in the months ahead.