New inflation numbers are on the horizon, prompting speculation as to their role in the U.S. economic chaos rattling Wall Street and Main Street.
Post-pandemic interest rates on everything from small business loans to consumer credit cards to home mortgages are kicking up the same concern: Too darn high.Â
Related: Jobs report shifts Fed interest rate forecasts
Market participants remain downbeat about interest rate cut chances despite President Trump’s multiple escalating demands directed at Federal Reserve Board Chair Jerome Powell.
Trump demands a full point cut in interest ratesÂ
The Federal Reserve sets monetary policy to target low inflation and unemployment. This dual mandate is often at odds because higher interest rates lower inflation but increase job losses, while lower interest rates lower unemployment but increase inflation.
Consumer Price Index for All Urban Consumers (CPI-U) increased 2.3% for the 12 months ending April 2025, after rising 2.4% over the same period in March.Â
The April change was the smallest 12-month increase in the all items index since February 2021, according to the Bureau of Labor Statistics.
Related: Fed Chair hit with savage message on interest rates
Most recently, the president said he wanted to see a full 1% cut in the Federal Funds Rate, currently between 4.25 and 4.50%, the actual interest rate at which depository institutions trade federal funds with each other overnight.
Trump maintains that high interest rates are causing dire concern—and, in some cases, despair—among investors, businesses, and consumers.
A higher Fed Funds Rate means higher Treasury bond yields. Banks use Treasury yields to set auto, credit card, and mortgage interest rates.
May CPI report is coming up fast this week
Many economic experts say 2025’s whiplash trade wars, fueled by Trump’s tariff games, are leading the economy into a dangerous landing. Some speculate that a recession or even stagflation could be ahead in the last two quarters of 2025.
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The CME’s highly-watched FedWatch tool showed a decline in odds of an interest rate cut this summer.Â
Thus, the odds of the Fed cutting interest rates in the second half of 2025 will increase if next week’s May CPI and PPI data support the “May inflation data we’ve seen thus far, and there is no meaningful progress on trade deals,’ according to TheStreet’s Chris Versace.
May Labor Department figures on jobs were slightly higher than expected but down from April.Â
This soft jobs report led Fed watchers to turn to the CPI as a harbinger of potential Fed action, including a possible quarter-point cut this summer that would serve as the only rate deduction for the year.
The May CPI numbers will be released at 8:30 a.m. June 11. If that figure is lower or higher than expected, it will likely reset interest rate predictions again.Â
Related: Veteran fund manager revamps stock market forecast
