Rising prices across an array of goods from coffee to audio equipment to home furnishings pulled inflation higher.

Trump has criticized Powell for months because the chair has kept the short-term interest rate the Fed controls at 4.3% this year, after cutting it three times last year. Powell says the Fed wants to see how the economy responds to Trump’s sweeping tariffs on imports, which Powell says could push up inflation.

Federal Reserve governor Adriana Kugler said the Fed should hold interest rates steady for a while to come, because new trade barriers are likely to spark more inflation in the months ahead. Speaking at a housing conference in Washington,

Higher tariffs put in place by the Trump White House this year have started to increase inflation, and these effects are likely to increase in the coming months, New York Fed President John Williams said Wednesday.

What is clear is that the current 4.33% median Fed funds target rate remains well above the inflation trend. Even after the acceleration in consumer prices in June, the policy rate is roughly 1.4 percentage points above headline CPI’s one-year change – close to the biggest gap post-pandemic.

Mortgage rates rose this week, but steady inflation data suggests a more stable outlook. Buyers may benefit from clearer signals in the months ahead.

The central bank is poised to hold interest rates steady this month, but there could be a path to cut as early as September.

Federal Reserve Bank of Atlanta President Raphael Bostic said he still supports holding interest rates steady and pointed to recent inflation data showing price pressures are rising.

With June's inflation reading coming in hotter than the month prior, the Fed is under renewed pressure to maintain its current target range for the federal funds rate. Analysts now see little chance of a rate cut in the near term. That means HELOC borrowers are unlikely to see significant rate drops anytime soon.