Trump has demanded the U.S. central bank lower its benchmark overnight interest rate immediately by a full percentage point, a dramatic step that would amount to an all-in bet by the Fed that inflation will fall to its 2% target and stay there regardless of what the administration does and even with dramatically looser financial conditions.

Inflation rose less than expected in May, a month when the effects of higher tariffs were starting to become more widespread.

Inflation moved up in May as Trump's tariffs threatened to filter into consumer prices, CPI report shows. Gasoline prices declined for fourth month

The Federal Reserve is widely expected to hold interest rates steady next week, with investors focused on new central bank projections that will show how much weight policymakers are putting on recent soft data and how much risk they attach to unresolved trade and budget issues and an intensifying conflict in the Middle East.

The inflation rate is inching higher, with Wall Street expecting tariffs to increase prices throughout the remainder of 2025.

The Consumer Price Index rose 2.4 percent in May, from a year earlier, a reading that reflects only the initial impact of President Trump’s tariffs.

Inflation ticked slightly higher in May, rising 2.4%, in line with expectations, according to the U.S. Consumer Price Index released Wednesday. Prices rose 0.1 percent for the month, according to the Bureau of Labor Statistics. The month-over-month increase is less than expected.

Americans have yet to feel any sting of inflation from the Trump tariffs when they go shopping. Now a new look at wholesale prices suggests the coast might be clear for a while longer.