Fed, Trump and Inflation
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Fed’s Favored Inflation Gauge Likely Stalled
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With June's inflation reading coming in hotter than the month prior, the Fed is under renewed pressure to maintain its current target range for the federal funds rate. Analysts now see little chance of a rate cut in the near term. That means HELOC borrowers are unlikely to see significant rate drops anytime soon.
The Bureau of Labor Statistics reported that the consumer price index (CPI), a popular inflation gauge, increased in June to 2.7% on an annual basis as prices rose for consumers.
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 inflation gauge the Federal Reserve relies on most to decide whether to raise or lower U.S. interest rates is likely to cement a decision by the central bank to stand pat at its next meeting at the end of July.
The speech comes as President Donald Trump intensifies pressure on the Fed to lower borrowing costs. Trump has repeatedly attacked Powell and has floated firing and replacing him before his term ends in May 2026. Waller, a Trump appointee, is considered a top contender for the job in part because of his dovish stance on interest rates.
Some investors had clung to a bit of hope that the Federal Reserve would cut interest rates at its next meeting on July 30. Tuesday's report on inflation brought the chances of that down even further.
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell on Thursday said the agency’s renovation of two of its buildings is in compliance with plans approved by a local commission, disputing a White House suggestion that they may have violated the law by deviating from those plans.
While Trump may be denying reports he will fire Powell, reports tell a different story. Here's what Tennesseans need to know about Powell and the Fed.
If you're thinking about tapping your home's equity, make sure you understand what could happen with rates soon.