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U.S. inflation eases to 4.0% in May as key Fed decision looms -- Inflation in the U.S. rose at a slower pace yet again in May, potentially bolstering the case for the Federal Reserve to push pause on a long-standing policy tightening campaign later this week.

The country's consumer price index for the month increased by 4.0% on an annual basis, down from 4.9% in April, according to data from the Bureau of Labor Statistics on Tuesday. Economists had expected the number to cool to 4.1%.

It was headline inflation's eleventh straight month of easing and the slowest rate since early 2021, but the figure still remains double the Fed's stated 2% target. Month-on-month, the reading inched up by 0.1%, decelerating from 0.4% in the prior month.

A fall in airline fares and gasoline prices added downward pressure on to inflation, although these declines were offset by a jump in shelter and used car costs.

Meanwhile, core prices, which strip out more volatile items like food and energy, rose by 5.3% annually and 0.4% monthly, in line with estimates.

The numbers could factor into the decision-making process of Fed policymakers as they begin a crucial two-day meeting today.

The Fed has been raising interest rates for more than a year to combat elevated inflation, so the CPI print is expected to play a pivotal role in whether the central bank chooses to temporarily halt its tightening cycle or hike borrowing costs further.

"While housing costs and vehicle prices continue to run hot, the outlook is improving rapidly. This should cement expectations for the Fed to keep rates unchanged tomorrow but the commentary around the decision is likely to remain hawkish," analysts at ING said in a note.

According to's Fed Rate Monitor Tool, at 08:46 ET, there was a more than 80% chance that Fed officials will keep the benchmark rate steady at a range of 5.00% to 5.25%, while the probability that the bank will unveil a 25 basis point increase stood at just under 20%.

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