The Consumer Price Index (CPI) report for June showed reheating inflation. The overall 12-month inflation rate rose from 2.4% to 2.7%, while the Core rate, which excludes the volatile food and energy components, rose from 2.8% to 2.9%.
The rate of inflation has been in a slow downtrend, however in this latest release it moved even further from the Fed’s 2% goal. This rise in inflation, along with the resurgence of tariff threats and trade war tensions, support a “wait and see” strategy for monetary policy. As rate cuts become less likely at the Feds meeting at the end of the month, investors will need to face the music that lower rates are not a guarantee.