Headline inflation rose 0.5% in May, meeting expectations, while a softer-than-expected core reading—excluding food and energy—helped improve market sentiment.

The U.S. inflation report came in largely as forecast, reinforcing expectations that the Federal Reserve will maintain its benchmark rate in the 350–375 bps range at its June 17 meeting, though markets still see a possible 25 bps hike by the end of the year.

Data from the Bureau of Labor Statistics showed the Consumer Price Index rose 4.2% year-over-year in May, matching economist projections and accelerating from April’s 3.8% increase.

On a monthly basis, CPI increased 0.5%, in line with expectations and slightly below April’s 0.6% gain. Core CPI, which excludes food and energy, rose just 0.2%, undercutting forecasts of 0.3% and slowing from 0.4% in April. Year-over-year core inflation came in at 2.9%, matching estimates and edging up from 2.8% previously.

Bitcoin (BTC) ticked higher after the data release but remained subdued overall, trading just above $61,000 and largely flat over the past 24 hours.

Broader markets were weaker, with U.S. stock futures declining across the board. The 10-year Treasury yield climbed to around 4.5%, while WTI crude oil extended losses, falling another 1% to roughly $88 per barrel.

Before the release, markets were pricing in a 98% probability that the Federal Reserve would hold rates steady at its June meeting, according to the CME FedWatch Tool.