15 Jul 2025
1) Core CPI comes in cooler than expected (2.9% vs. 3.0% expected). Note however that this is the highest level since February. On a sequential basis, U.S. core CPI rose 0.2% M/M, below estimates for a 0.3% increase.
2) Headline CPI inflation increased 2.7% Y/Y, ABOVE forecasts for a 2.6% reading. This is also the highest level since February. On a sequential basis, US CPI rose 0.3% on the month, in line with estimates.
3) Looking at the various CPI components, it seems that tariffs are beginning to drive up prices for core goods like clothing, furniture, appliances, shoes & toys. However, falling car prices are helping to mask full impact.
▶️ All in all, today’s inflation report effectively eliminates any chance of a Fed rate cut at the July 30 FOMC meeting. And if subsequent inflation readings reiterate the rise in inflation, it could jeopardize future rate cuts as well.
✅ The CME Group’s FedWatch tool showed only a 2.6% probability of a fed rate cut at the meeting.
👉 Yes, indeed. The us inflation outlook remains highly uncertain. And so is the US tariff policy. On our side, we believe that the Fed might cut rates only once in 2025.
Source: Bloomberg
