31.07.2025 15:56

June's Personal Consumption Expenditures (PCE) inflation data, released by the Commerce Department, provided Jerome Powell with precisely the justification he sought to maintain the Federal Reserve's current monetary policy stance. The report revealed unexpectedly robust inflation figures.

Headline PCE inflation climbed 0.3% for the month, a significant acceleration from May's 0.1% increase, reaching a yearly rate of 2.6% – surpassing the previous month's 2.3%. Similarly, core PCE inflation, excluding volatile food and energy prices, also showed strength, registering a 0.3% monthly rise and a 2.8% annual increase, slightly higher than the 2.7% observed in May. These results exceeded market forecasts.

This unexpectedly strong inflation data bolsters the Fed's decision to hold interest rates steady for the fifth consecutive meeting, remaining within the range of 4.25% to 4.5%. While the Fed had previously indicated a cautious approach, the latest figures indicate a deceleration in inflation's decline, providing further justification for the current policy. Furthermore, the administration's tariff policies add another layer of complexity, discouraging any imminent rate cuts.

Following the release of the PCE data, President Trump renewed his criticism of Jerome Powell on Truth Social, labeling him "TOO LATE, TOO STUPID, & TOO POLITICAL," and accusing him of costing the United States "TRILLIONS OF DOLLARS." Trump's post, published hours before the official inflation figures were announced, continued his pattern of public attacks against Powell, extending a months-long campaign criticizing the Fed Chair's handling of interest rates and the central bank's building renovations.

Underlying Trump's pronouncements, the Federal Reserve is closely monitoring the economic ramifications of the administration's tariffs. The Fed's actions, therefore, are shaped not only by inflation data but also by the complex interplay of political and economic factors.