With core CPI on the rise, the Fed is set to hike tomorrow - ING

"Headline consumer price inflation rises to 2.8% in May with a strong chance it hits 3% in June. With core CPI on the rise, the Fed is set to hike tomorrow and signal two more rate increases in 2H18," ING analysts wrote in their latest report.

Key quotes

"May US consumer price inflation rose 0.2% MoM/2.8% YoY, which was in line with market consensus while core came in at 0.2%/2.2%, again, as expected."

"With the economy looking set to post growth in the region of 3.5% annualised in 2Q18 – note the Atlanta Fed Nowcast model based on data already released is suggesting something close to 4.6% - and the jobs market going from strength to strength we think the Fed will hike rates tomorrow."

"Trade concerns remain a major issue, but we expect the Fed’s statement to sound positive on economic momentum. Meanwhile, the Fed’s “dot diagram” should show growing expectations that it will hike rates two more times in the second half of the year, the same as we are forecasting."