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Gregory Daco highlights that inflation accelerated in May 2026, leading to a real income squeeze. He notes that headline inflation reached 6.3% over three months, 5.3% over six months, and 4.1% over twelve months. Core PCE inflation was reported at 4.1% on a three-month basis, 3.5% over six months, and 3.4% for twelve months. Daco suggests the pressure should ease slightly in June.
Earlier this month, Daco reported that Kevin Warsh is preparing to revamp Federal Reserve communication and may reverse forward guidance on rates in June. He also noted the Fed’s creation of five task forces focused on key policy areas, including inflation and data. These developments come as policymakers face renewed pressure from rising consumer prices.