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.

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

Key Takeaways Inflation rose in June, moving further from the Federal Reserve's goal of 2% each year.This flare of inflation will likely discourage the Fed from cutting its influential interest rate later this month.

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.

Christopher Waller, a potential contender to be the next chair of the central bank, said the Federal Reserve should not wait for the labor market to weaken to reduce interest rates.

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.

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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.