Federal Reserve Chairman Jerome Powell emphasized the inflationary effects of tariffs on June 30. Throughout his meetings, the term ‘tariffs’ has been cited nearly 200 times, highlighting their significance for the Federal Reserve. The forthcoming inflation data provides a clearer understanding of the intricate relationship between tariffs and inflation.
U.S. Inflation Data
Major banks and analytical firms projected a slight increase in inflation for July. For the Federal Reserve to initiate interest rate cuts, the impact of tariffs on inflation needs to remain limited. With the effective tariff rate now exceeding 17%, recent reports have distinctly captured this effect. Although the Federal Reserve is yet to disclose its interest rate decisions, one more inflation report is expected. Meanwhile, cryptocurrencies are expected to remain volatile. While more Federal Reserve members lean towards interest rate cuts, achieving the necessary consensus of seven members remains elusive, with optimists currently counting only five votes.
Today’s Consumer Price Index (CPI) and tomorrow’s Producer Price Index (PPI) data will heavily influence expectations around interest rate reductions. The figures were just revealed as follows:
- U.S. CPI Announced: 2.7% (Expectation: 2.8% Previous: 2.7%)
- U.S. Core CPI Announced: 3.1% (Expectation: 3% Previous: 2.9%)
The monthly Core PPI rose by 0.3%, aligning with expectations, while headline inflation grew by 0.2% monthly. The overall inflation report exceeded expectations, prompting Bitcoin 
$76,587 to recover to $119,000.
