Former Treasury Secretary Lawrence Summers warned that President Donald Trump’s bid to assert control over the Federal Reserve and drive down interest rates could trigger a surge in inflation expectations that pushes up long-term borrowing costs.

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 Bureau of Labor Statistics reported that the consumer price index (CPI), a popular inflation gauge, increased in June to 2.7% on an annual basis as prices rose for consumers.

With the Federal Reserve's July meeting on the horizon, many prospective homebuyers and homeowners are wondering what it could mean for mortgage rates. After years of relatively high borrowing costs, even the slightest dip could open doors for those hoping to buy or refinance. But the path forward is far from clear.

The U.S. is expected on Tuesday to report that rising costs for imported goods lifted overall consumer prices in June, kicking off what might be several months at least of such increases and giving Federal Reserve officials highly awaited data on whether the Trump administration's tariffs are boosting inflation.

Also in today’s newsletter, US set to ban Chinese tech in submarine cables, and Nvidia chief vows to ‘accelerate recovery’ of China sales

The report on wholesale inflation came a day after the Labor Department reported that consumer prices last month rose 2.7% from June 2024, the biggest year-over-year gain since February, as Trump’s sweeping tariffs pushed up the cost of everything from groceries to appliances.