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U.S. Annual Inflation Slows in June

Meanwhile, labor costs cooled in Q2

U.S. annual inflation logged its smallest increase in more than two years in June, with underlying price pressures moderating, a trend that, if sustained, could push the Federal Reserve closer to ending its fastest interest rate hiking cycle since the 1980s.

The improving inflation environment was underscored by other data on Friday showing labor costs rose at their slowest pace in two years in the second quarter as wage growth cooled. Receding inflation has raised cautious optimism of a "soft landing" for the economy envisaged by Fed officials rather than the recession that most economists have been predicting.

On Wednesday, the U.S. central bank raised its policy rate by 25 basis points to the 5.25 percent-5.50 percent range, a level last seen just prior to the 2007 housing market crash and which has not been consistently exceeded for about 22 years.

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