Consumer Price Index report for June released - here's what it means for your 401(k)

Wednesday is a big day for Americans who want to buy a home or keep a keen eye on their 401(k)s - as a rare double header of economic news lands.

Fresh inflation data in the consumer price index lands in the morning at 8.30am - then in the afternoon the Federal Reserve will reveal how it plans to react.

The month-on-month CPI rate was unchanged - lower than the 0.1 percent increase that Wall Street had expected. 

Compared to a year ago, inflation for May cooled to 3.3 percent - meaning prices rose by that amount across the board. But that figure was also lower than expected. Most economists thought it would be 3.5 per cent. Cheaper gas helped.

These lower reads casused stock futures to spike, and also sent bonds yields - a proxy for interest rates - down too. 

S&P 500 futures are up 0.8 percent, the tech-heavy Nasdaq 100 is up 1 percent. 

Cooling inflation means more than just prices falling for Americans. It gives the green light to Fed officials to consider lowering interest rates - which cut borrowing costs for consumers and businesses.

Of course, it would mean mortgage rates falling, and a cut in credit card rates and the cost of loans for autos. That frees up money for Americans to spend, which is good for busineses

Lower rates are good for businesses in another way too. They make it cheaper for them to borrow and grow their business.

All of the above means Wall Street likes lower rates - and that means stock prices, and 401(K)s - go up

The Consumer Price Index report for May is expected at 8.30am ET, while the Fed's policy announcement is due at 2pm ET.

The Fed is expected to keep rates as they are -  at a 23-year-high of between 5.25 and 5.5 percent.

But the tone of what Jermoe Powell says at 2.30pm will give clues as to how soon the rate will be cut. Investors looks for guidance. 

It will be the seventh consecutive time the Fed has kept rates at that level.

Inflation must cool in order for the Fed to cut interest rates. Higher rates curb consumer spending - and lower demand for goods causes prices to fall.

The Fed wants the annual rate of inflation down to 2 percent.