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Inflation Heats Up: Fed Eyes Tariffs, Delays Cuts

Inflation accelerated in June, complicating the Federal Reserve’s decision on when to cut interest rates. The Consumer Price Index (CPI) rose 0.3% month-over-month and 2.7% year-over-year—both higher than expected. Core inflation (excluding food and energy) also ticked up slightly to 2.9% annually.

Key drivers included:

• Food prices rose 0.3% in June; dining out costs increased 0.4%.

• Energy costs rebounded 0.9%, with gasoline and natural gas leading.

• Shelter prices rose 0.2% and were the main contributor to overall CPI gains.

• Transportation costs rose modestly, while airline fares dipped.

Fed Chair Jerome Powell said earlier rate cuts were delayed due to tariff uncertainty, and analysts warn tariffs may now be fueling renewed inflation pressure—particularly in goods.

Despite modest core inflation, the June data decreased the odds of a near-term rate cut. Markets now see a 97% chance rates will hold steady this month and a 42% chance they won’t change in September either. The Fed is expected to remain in “wait and see” mode through summer, watching upcoming CPI reports closely. Read More. 

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Warren Buffett Cuts U.S. Bank Stocks as Wall Street Hits Highs—A Warning Sign?

Warren Buffett has significantly reduced Berkshire Hathaway’s exposure to major U.S. banks—selling billions in shares of Citigroup, Bank of America, and Capital One—just as Wall Street banks post record profits. Despite bullish earnings, Buffett is signaling caution, building a $350 billion cash reserve and leaning into defensive sectors like energy and consumer goods. Analysts believe this shift suggests Buffett sees trouble ahead, especially as inflation rises, Trump’s tariff policies sow uncertainty, and long-term borrowing costs increase. Other insiders like Jamie Dimon are also quietly offloading shares.

With tariffs expected to push inflation and borrowing costs higher, the lending arms of banks may suffer even as trading desks thrive in the short term. Consumption slowdowns, potential Fed leadership upheaval, and eroding confidence in economic policy could create a feedback loop of pain for the financial sector. Read More.