The monthly inflation rate dropped in June for the first time in over four years, providing further justification for the Federal Reserve to begin lowering interest rates later this year. The US Consumer Price Index, which measures the cost of goods and services across the US economy, declined by -0.1% monthly and grew by 3.0% compared to the same period last year. This achievement marks its lowest level since April 2021. Additionally, the annual inflation rate decreased significantly from 3.3% in May, falling below expectations. The 3.8% decline in fuel prices in June offset increases in food and housing costs, which rose by 0.2%.

Simpan View

Considering that housing-related prices carry the highest weight in US inflation, this is a very positive development if the Fed intends to cut interest rates in the near future. It can be said that the slowdown in housing prices is the final challenge on the path to lowering interest rates in the coming months.

Broadly speaking, the decline in US inflation is the most anticipated sentiment in the global capital markets. Despite the Fed's target of 2% inflation annually, the June figures provide stronger reasons that price trends are moving in the right direction. We believe that the stocks most affected in the global development are big cap or blue-chip stocks. Therefore, since the drastic correction of IHSG in early Q2, we have positioned ourselves with a significant allocation to big cap stocks in our mutual funds. In addition, we continue to adopt short- and medium-term fixed income strategies to mitigate volatility. With this, we are confident that our selected assets can provide sufficiently optimal returns in a more conducive global market environment.