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.

President Donald Trump sent the U.S. stock market on a jagged round trip Wednesday after saying he had "talked about the concept of firing" the head of the Federal Reserve. Such a move could help Wall Street get the lower interest rates it loves but would also risk a weakened Fed unable to make the unpopular moves needed to keep inflation under control.

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.

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.

A new report shows inflation has picked up and analysts believe the prices of many goods increased, in part, because of President Trump’s tariffs. It will play into decisions by the Federal Reserve about when and whether to cut interest rates and comes as the president and his team have ramped up their pressure campaign on Fed Chair Jerome Powell.

Where’s all the inflation from the Trump trade wars? So far, the evidence really hasn’t shown up — but many economists say it’s coming soon, perhaps as soon as this week.

Two key inflation reports are due this week as the battle over interest rates continues.