The U.S. Department of Labor reported on June 11, 2025, that the Consumer Price Index (CPI) rose by 0.1% in May, bringing the annual inflation rate to 2.4%. This figure slightly exceeded April’s 2.3% but remained below economists’ expectations of 2.5%, suggesting that recent tariffs have not significantly impacted consumer prices. Core inflation, which excludes volatile food and energy prices, increased by 2.8% year-over-year.
In response to the data, President Donald Trump renewed his call for the Federal Reserve to implement a full percentage point cut in interest rates. Trump emphasized that such a move would reduce borrowing costs and alleviate interest payments on national debt. Vice President JD Vance echoed this sentiment, criticizing the Fed’s decision to maintain current rates as “monetary malpractice.”
Despite political pressure, the Federal Reserve has signaled its intention to keep interest rates steady, citing concerns over potential inflationary effects from recently imposed tariffs. Fed Chair Jerome Powell warned that sustained tariffs could lead to higher inflation, slower economic growth, and increased unemployment.
Financial markets responded positively to the inflation report and the preliminary U.S.-China trade agreement. Government bonds rallied, with the yield on 10-year Treasury notes dropping to 4.413% from 4.472% the previous session. U.S. crude oil prices also surged by 4.9% to $68.15 a barrel amid reports of a partial evacuation of the U.S. embassy in Iraq due to regional security concerns.
The Federal Reserve’s next policy meeting is scheduled for later this month, where it will assess the evolving economic landscape, including the impact of tariffs and inflation trends. While forecasts vary, some economists anticipate rate cuts starting in September, whereas others remain cautious, citing risks of accelerating inflation.
As the global community watches closely, the Fed’s decisions in the coming months will be pivotal in shaping the U.S. economic trajectory amid ongoing trade tensions and political pressures.
