US CPI: June Inflation Outruns Consensus Calls with 2.7% Increase as Tariffs Bite. Uh-Oh?

Is this just the start? The highest inflation print of the year so far is a curveball to both the Fed and market participants.

🔥 June Prints Hotter Than Expected

• US inflation USCPI clocked in at 2.7% year-over-year in June, up from May’s 2.4% and topping Bloomberg analysts’ 2.6% call (but in line with economists surveyed by the WSJ) — marking the highest inflation print of 2025 so far.
• Month-over-month, consumer prices rose 0.3%, a clear acceleration from May’s 0.1% bump, adding fuel to worries that Trump’s tariffs are squeezing price tags across the board.
• The core CPI, which strips out food and energy, also edged higher: up 2.9% YoY versus 2.8% in May, and 0.2% MoM, doubling last month’s pace.

🏛️ Tariffs Pile Pressure on the Fed

• The surprise jump is sending fresh shockwaves through the bond pits and the Fed watch crowd, with markets now rethinking the odds of a near-term rate cut.
• President Trump is pressuring Fed Chair Jay Powell to slash rates by as much as 3 percentage points — but boss Powell and the FOMC are holding the line until they see how sticky this tariff-fueled inflation really is.
• For now, most policymakers want to keep borrowing costs unchanged, worried that an early cut could fan the very price pressures they’re trying to manage. Still, markets are pricing in a huge chance of a cut in September.

🛬 Dollar Softens, Stocks Mostly Hold Up

• Despite the hotter CPI, US stocks were in the green but not buoyed higher by the inflation readout. It was largely thanks to Nvidia’s NVDA monster jump of 4% (considering the chip giant’s $4 trillion valuation) after the big, scary China ban was lifted.
• The US dollar soared across major forex pairs as traders weighed whether this surprise print is an outlier or the beginning of a stickier trend.
• All eyes now turn to this month’s Fed meeting — and whether the central bank will stay cool under the heat or blink first in this economic tug-of-war.