Emre Yumlu 
The latest inflation data released in the United States has strengthened expectations for an interest rate cut in September. Markets have priced in that the Federal Reserve (Fed) will begin its rate-cutting cycle in September and deliver a second cut by the end of the year.
According to data published by the U.S. government, the Consumer Price Index (CPI) rose by only 0.1% in May. This figure was lower than the 0.2% increase seen in April. On an annual basis, inflation stood at 2.4%, falling short of economists’ expectations of 2.5%.
This “mild” inflation data has further strengthened the market’s conviction for a rate cut. According to data from CME Group, the probability of a rate cut in September rose to 76%, up from 69% just a day earlier.
Trump and Powell’s Interest Rate Dispute Continues at Full Speed
Meanwhile, tensions between U.S. President Donald Trump and Fed Chair Jerome Powell are escalating. On June 12, Trump once again launched harsh criticism against Powell.
Trump called Powell a “numbskull” and claimed that a 2-point interest rate reduction would save the U.S. economy $600 billion annually. “But we can’t get this guy to do it,” said Trump, suggesting that he might be forced to intervene if necessary.
Trump’s remarks came shortly after the Labor Department reported that producer prices rose less than expected in May. This development indicated that inflation is not rising, further supporting Trump’s argument for rate cuts.
Trump’s latest statements mark the third time in two days that his administration has criticized the Fed.
Commerce Secretary Howard Lutnick said, “Inflation is low, the economy is ready. The Fed Chair must do his job,” openly backing Trump’s stance.
Vice President JD Vance also commented on social media, stating, “The Fed’s refusal to cut rates is monetary malpractice.”
Despite these statements, markets remained largely unaffected. However, investors are increasingly aware of the growing political pressure on Powell.
At one point, Trump had signaled the possibility of removing Powell from his position. But after strong market backlash, he backed off. In his latest remarks, Trump said, “I’m not going to fire Powell, but I don’t see why it would be so bad,” once again reigniting the debate.
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