US inflation rate hits 3-year high, may strengthen expectations of Fed rate hike this year.

BlockBeats news, June 25 - Data released on Thursday showed that U.S. consumer demand showed signs of recovery amid rising inflationary pressures, accompanied by a significant acceleration in the pace of price increases. U.S. inflation rose to 4.1% in May, the highest level in over three years, while consumer spending grew by 0.3%, indicating resilient demand. Meanwhile, first-quarter GDP was revised up to 2.1%.

Analysts pointed out that these stronger data are likely to reinforce market expectations that the Federal Reserve will raise interest rates later this year.

The Fed kept interest rates unchanged in the 3.50%-3.75% range last week, but updated quarterly projections showed policymakers expect to raise rates this year due to heightened inflation concerns. Financial markets are betting on a rate hike as early as September, with possibly another one afterward.