That swung the spotlight squarely onto producer price data due later today, which could reveal an even bigger building of price pressures, because businesses may still be holding back on passing higher costs to consumers.
This validates Fed Chair Jay Powell's repeated assertion that an expected emergence of tariff-led inflation uptick this summer is cause to hold off on further interest rate cuts for now.
Traders were listening, trimming back bets to 43 basis points of cuts over the rest of the year, from closer to 50 basis points earlier in the week.
President Donald Trump's reading of the data was different though, as he took to his Truth Social platform to post, "Consumer Prices LOW. Bring down the Fed Rate, NOW!!!"
Trump has repeatedly railed against the Fed for not cutting rates, even calling for Powell's resignation, which has fuelled concerns that the U.S. President aims to put the Fed under his thumb.
Powell's tenure ends in May next year, but he has a seat on the Board of Governors until January 2028.
Trump said Tuesday that Treasury Secretary Scott Bessent could be a candidate to replace Powell, but "because I like the job he's doing" currently, he may not end up as a contender.
Bessent, meanwhile, said in an interview on Bloomberg Surveillance that a "formal process" is already starting to identify the next Fed Chair.
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