Inflation expected to have cooled in June

A monthslong stretch of progress in the fight against inflation will face another test on Thursday when a U.S.government agency releases fresh data on price increases.Inflation has cooled for three consecutive months, reversing a surge in prices that took hold at the outset of 2024.Price increases have slowed significantly from a peak of more than 9%, but inflation remains more than a percentage point higher than the Fed's target rate of 2%.Economists expect consumer prices to have increased 3.1% over the year ending in June.

That figure would mark a modest slowdown from the 3.3% rate recorded a month prior.MORE: What does Biden's uncertain future mean for investors? Analysts weigh inDespite the cooldown of prices in recent months, the Federal Reserve has opted to keep its benchmark interest rate highly elevated.The Fed Funds rate remains between 5.25% and 5.5%, matching its highest level since 2001.A further reduction of inflation could heighten pressure on the Fed to move forward with a set of interest rate cuts that the central bank forecasted late last year.Speaking to House members in Washington, D.C., on Wednesday, Fed Chair Jerome Powell touted "modest further progress" in the fight to slow price hikes over recent months.Still, he added, the Fed will not lower interest rates until it has "gained greater confidence that inflation is moving sustainably toward 2%."While the economy has proven resilient this year, recent performance suggests that high interest rates have begun to slow activity.Federal Reserve Bank Chair Jerome Powell speaks during a House Financial Services Committee hearing on the Federal Reserve's Semi-Annual Monetary Policy Report at the U.S.

Capitol on July 10, 2024 in Washington, DC.Bonnie Cash/Getty ImagesA jobs report released on Friday showed that the economy added a robust 206,000 jobs in June.However, downward revisions for hiring over the previous two months brought the three-month average to its lowest level since January 2021.

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Publisher: ABC News

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