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.

The inflation gauge the Federal Reserve relies on most to decide whether to raise or lower U.S. interest rates is likely to cement a decision by the central bank to stand pat at its next meeting at the end of July.

The Indian rupee fell on Wednesday as the latest U.S. inflation report showed that tariffs were beginning to feed into prices, weakening bets on rate cuts by the Federal Reserve, which lifted U.S. Treasury yields and the dollar.

President Donald Trump is not a supporter of Federal Reserve Chairman Jerome Powell, and his administration is applying pressure on the central bank.

U.S. stocks are shaky after President Donald Trump said he had talked about the concept of firing the head of the Federal Reserve.

Some investors had clung to a bit of hope that the Federal Reserve would cut interest rates at its next meeting on July 30. Tuesday's report on inflation brought the chances of that down even further.

A new report shows inflation has picked up and analysts believe the prices of many goods increased, in part, because of President Trump’s tariffs. It will play into decisions by the Federal Reserve about when and whether to cut interest rates and comes as the president and his team have ramped up their pressure campaign on Fed Chair Jerome Powell.

The producer price index for total final demand was unchanged in June, the Bureau of Labor Statistics reported.