U.S. President Donald Trump renewed his call for the Federal Reserve to enact a substantial interest rate cut following the release of the May Consumer Price Index (CPI) data on Wednesday. Describing the inflation report as a “great” number on his social platform Truth Social, Trump urged the Fed to “lower one full point,” emphasizing the importance of reducing borrowing costs on upcoming debt payments.
The May CPI showed a moderate increase in inflation compared to the previous year, with the overall index rising 2.4% year-over-year, slightly higher than April’s reading. Meanwhile, the core CPI, which excludes volatile food and energy prices, increased by 2.8% over the same period. Many analysts anticipate that inflationary pressures could intensify further due to the administration’s significant import tariffs on a wide range of goods.
This inflation data arrives ahead of the Federal Reserve’s policy meeting scheduled for next week, where officials are widely expected to keep interest rates steady within the current target range of 4.25% to 4.5%. Fed members have indicated a cautious “wait-and-see” approach amid uncertainty caused by shifting trade policies under the Trump administration, which complicate economic forecasts.
Economists and Fed officials broadly agree that the tariffs contribute to higher inflation, while simultaneously slowing economic growth and dampening job creation. However, some of these risks have eased as Trump has scaled back the most aggressive tariff plans.
A recent report from the New York Fed found that many manufacturers and service providers are passing tariff costs onto consumers. Conversely, a separate New York Fed survey released earlier this week revealed declining public concern over future inflation, suggesting a potential easing in sustained price pressures.
Following the CPI announcement, futures markets have increased expectations that the Federal Reserve may consider lowering interest rates at its September meeting.
