Trump has demanded the U.S. central bank lower its benchmark overnight interest rate immediately by a full percentage point, a dramatic step that would amount to an all-in bet by the Fed that inflation will fall to its 2% target and stay there regardless of what the administration does and even with dramatically looser financial conditions.

Central bank benchmark borrowing costs are now more than 2 percentage points lower in Europe than the US, a divide that has caught the attention of President Trump.

Inflation ticked slightly higher in May, rising 2.4%, in line with expectations, according to the U.S. Consumer Price Index released Wednesday. Prices rose 0.1 percent for the month, according to the Bureau of Labor Statistics. The month-over-month increase is less than expected.

The Federal Reserve is widely expected to hold interest rates steady next week, with investors focused on new central bank projections that will show how much weight policymakers are putting on recent soft data and how much risk they attach to unresolved trade and budget issues and an intensifying conflict in the Middle East.

Inflation moved up in May as Trump's tariffs threatened to filter into consumer prices, CPI report shows. Gasoline prices declined for fourth month

The forecasts could change again before the formal COLA announcement in October if higher U.S. tariffs cause prices to increase over the summer. The official announcement of 2026s

Former Treasury Secretary and Federal Reserve Chair Janet Yellen expects inflation to rise to “at least 3% or slightly over” due to tariffs, despite recent encouraging signs of price stabilization. During a CNBC interview,

For all the hand-wringing about tariffs, Americans are so far experiencing limited inflation from President Donald Trump’s protectionist trade policy.