Mixed global market reaction as US inflation surges
(MENAFN) Global financial markets displayed a mixed performance on Tuesday following a rise in U.S. inflation, largely attributed to newly imposed tariffs. At the same time, uncertainty lingered regarding the Federal Reserve's upcoming monetary policy decisions, as the central bank remains cautious.
Recent data showed that the U.S. Consumer Price Index (CPI) went up by 0.3% in June compared to the previous month, aligning with market expectations. However, on a yearly basis, the inflation rate jumped to 2.7%, exceeding analysts' forecasts. This marks the highest monthly inflation figure since January and the most significant annual increase since February.
When excluding food and energy, the core CPI grew 0.2% month-over-month and 2.9% year-over-year. These figures were slightly below market projections of a 0.3% monthly rise and a 3% annual increase. In May, core inflation had gone up by 0.1% from the previous month and 2.8% from the same month last year.
Experts have suggested that, due to the uncertain inflation outlook and potential economic pressures from tariffs, the Federal Reserve might delay any potential interest rate cuts. While speculation about a rate reduction in September has decreased, financial markets still anticipate the possibility of two total cuts within the year.
Attention is now shifting to upcoming Producer Price Index (PPI) data, which is expected to offer further insight into the trajectory of inflation in the United States.
Meanwhile, the Federal Reserve is under growing political scrutiny. U.S. President Donald Trump stated, “it would save $1 trillion a year if the bank lowered its rates by 3 points,” and also mentioned that Treasury Secretary Scott Bessent “is a candidate that could potentially replace Fed Chair Jerome Powell.”
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