Federal Reserve, inflation
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Fed, Trump and Jerome Powell
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What is clear is that the current 4.33% median Fed funds target rate remains well above the inflation trend. Even after the acceleration in consumer prices in June, the policy rate is roughly 1.4 percentage points above headline CPI’s one-year change – close to the biggest gap post-pandemic.
The producer price index for total final demand was unchanged in June, the Bureau of Labor Statistics reported.
CPI data reveals inflation trends, with core at 2.9%. Service sector inflation rises, suggesting the Fed may hold rates steady through year-end. Read more here.
The Indian rupee fell on Wednesday as the latest U.S. inflation report showed that tariffs were beginning to feed into prices, weakening bets on rate cuts by the Federal Reserve, which lifted U.S. Treasury yields and the dollar.
Inflation rose last month to its highest level in four months as the cost of gas, food, and groceries rose, reversing several months of cooling price pressures.
A busy week ahead for investors will see inflation data, the debate about the Fed's next move, and the start of second quarter earnings season all come into focus after a flurry of trade activity last week.
The year-over-year inflation rate surged to 2.7% in June from 2.4% in May, surpassing the forecast. Tariff effects were mixed in the new report. The Federal Reserve could use the new reading to help decide whether to change interest rates in late July.