The inflation rate is 2.4%. That is the May CPI print. Core inflation is 2.6%. Energy prices dropped 2.2%. Food prices are flat. Core goods fell 0.3%. Shelter costs are easing. The trend is cooling. The Federal Reserve sees it. But it is not moving. Chairman Jerome Powell told Congress on June 24 that inflation remains elevated. He said the Fed is well positioned to wait. That was the phrase. No cut. No shift. Just wait.
The economy is not running hot. It is slowing. The Atlanta Fed’s GDPNow model is tracking second quarter growth at 1.2%. Job creation has dropped to 152,000 per month. Retail sales missed expectations. Manufacturing is in contraction. The ISM index has been below 50 for three straight months. Labor force participation is stuck at 62.5%. Consumer credit growth is slowing. The data is not ambiguous.
🇺🇸 FED CHAIRMAN JEROME POWELL JUST SAID:
– FED IS WELL POSITIONED FOR THE TIME BEING TO WAIT TO LEARN MORE ABOUT LIKELY COURSE OF ECONOMY BEFORE ADJUSTING POLICY
– INCREASED TARIFFS LIKELY TO PUSH UP ON INFLATION, WEIGH ON ECONOMIC ACTIVITY
— Evan (@StockMKTNewz) June 24, 2025
Trump’s tariffs are now in effect. Steel, semiconductors, electric vehicles, pharmaceuticals, and solar panels are all facing higher import duties. The White House says it is about protecting American production. Powell says it will raise prices and weigh on growth. His exact words to Congress: increases in tariffs this year are likely to push up prices and weigh on economic activity. He said the effects could be short-lived or more persistent. He did not say which.
The Fed is not unified. Three members of the FOMC—Waller, Bowden, and Goolsbee—have all floated rate cuts by July. Powell is not joining them. He says the Fed needs more clarity. He says inflation expectations are stable. He says the labor market is still strong. But the numbers are softening. The bond market sees it. The futures market sees it. The Fed does not.
Trump is not quiet. He posted that inflation is under control and the Fed is stalling for politics. He called Powell slow and hardheaded. House Republicans echoed the line. They say the Fed is using stale data to justify inaction. The White House is pressuring for a cut before September. Powell is holding the line.
The contrast is sharp. Under Biden, inflation hit 7.1% and the Fed called it transitory. Under Trump, inflation is 2.4% and the Fed says it remains elevated. The framing has changed. The policy has not.
The next Fed meeting is four weeks away. The market is watching every word.
Sources:
https://www.bls.gov/news.release/cpi.nr0.htm
https://atlantafed.org/cqer/research/gdpnow
https://finance.yahoo.com/news/trumps-tariffs-highly-likely-cause-173557111.html
