Inflation Cools to 2-Year Low While Fed Remains Tight-Lipped – What’s Next for Markets?

Fed’s silence speaks louder than words as inflation finally chills

The data’s in—price pressures are easing faster than a Wall Street banker dodging accountability. With the Fed refusing to tip its hand, traders are left reading tea leaves in the economic data.

Why crypto could be the inflation hedge that actually works this time

While traditional markets wobble on Fed uncertainty, Bitcoin’s scarcity protocol doesn’t care about central bank posturing. The original hard money keeps verifying blocks while fiat printers stay (temporarily) quiet.

The great monetary policy paradox: doing nothing says everything

Powell’s team has mastered the art of strategic ambiguity—leaving markets to guess whether this pause is the calm before another rate hike storm. Meanwhile, decentralized finance keeps building through the uncertainty.

As the legacy system plays chicken with inflation, smart money’s stacking SATs. Because when central banks eventually blink, crypto’s ready to eat their lunch—again.

Trump pulls back after April tariff surge

Donald Trump, after escalating threats in April and calling it “liberation day,” pulled back slightly by early June. The WHITE House introduced a 90-day negotiation window with China, which many Americans saw as a possible turning point. While there’s no deal yet, the pause in aggressive rhetoric seems to have cooled fears for now. That change in tone, more than any actual resolution, appears to have shaped public mood.

Joanne Hsu, the director of the University of Michigan’s survey program, said the reaction wasn’t just emotional—it came straight from people recalculating risks. “Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed,” Joanne said. But she also added, “However, consumers still perceive wide-ranging downside risks to the economy.” This means that people may be calmer, but they’re far from relaxed.

Even with the rebound, sentiment levels remain below where they were this time last year. People haven’t forgotten how sudden policy moves from Washington can wreck plans and push prices up. The fear isn’t gone—it’s just less urgent. Trade war anxiety is still very much alive in the background.

One area where there’s been a big drop is inflation expectations. The one-year inflation outlook collapsed to 5.1%, falling 1.5 percentage points and hitting its lowest point since 1981. That’s not nothing. The five-year forecast barely moved, ticking down from 4.2% to 4.1%, but it still shows a slight pullback in longer-term concerns.

Inflation cools as Fed stays quiet

Joanne explained it like this: “Consumers’ fears about the potential impact of tariffs on future inflation have softened somewhat in June. Still, inflation expectations remain above readings seen throughout the second half of 2024, reflecting widespread beliefs that trade policy may still contribute to an increase in inflation in the year ahead.” Translation: Optimism is rising, but people are still watching closely.

It’s worth noting that the Michigan results have been more alarmist than other reports. The University’s inflation concerns haven’t matched what others have shown recently. Just this week, the Federal Reserve Bank of New York published its own outlook, showing that one-year inflation expectations fell to 3.2% in May, a 0.4 percentage point drop from April.

Also this week, the Bureau of Labor Statistics reported minimal increases in both consumer and producer prices. Each category ticked up just 0.1% month over month, signaling weak upward pressure despite the tariff drama. That hasn’t stopped economists from warning that price hikes tied to tariffs might still appear later this year. Most agree the effects are just delayed.

With inflation cooling and consumer worries slightly fading, the TRUMP administration is on the Federal Reserve’s neck. Trump and his advisors are openly asking the Fed to cut rates again. But the central bank isn’t rushing. Officials are meeting next week, and as of now, all signs point to no rate cut until at least September.

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