Federal Reserve governor Adriana Kugler said the Fed should hold interest rates steady for a while to come, because new trade barriers are likely to spark more inflation in the months ahead. Speaking at a housing conference in Washington,

“With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,” he said. “I believe it makes sense to cut the (Fed’s) policy rate by 25 basis points two weeks from now.” (Twenty-five basis points equals one quarter of an interest rate point.)

"I certainly think there are lessons to be learned there that the administration should be aware of," said Morningstar Wealth's Dominic Pappalardo.

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.

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.

Also in today’s newsletter, US set to ban Chinese tech in submarine cables, and Nvidia chief vows to ‘accelerate recovery’ of China sales

President Trump floated the idea of firing Jerome Powell — whom he first appointed Federal Reserve chair — earlier this week, after years of on-and-off criticism over interest rates.