June Inflation Hits 2.6%, Keeping Fed on Tightrope

• Gold falling as rising prices and political tensions rattled markets.

The United States Commerce Department (DOC) reported on July 31, 2025, that the Personal Consumption Expenditures (PCE) price index, the Federal Reserve (Fed)'s preferred inflation gauge, was in line with expectations in June. Inflation climbed to an annual 2.6%, reinforcing pressure on the Fed to keep rates steady despite persistent price pressures.

The report showed that headline PCE increased by 0.1% month-over-month. Core PCE, which excludes volatile food and energy prices, also rose 0.1% for the month and 2.6% year-over-year. The metrics were in line with Wall Street forecasts, illustrating the lingering challenges of inflation.

These findings arrived a day after the Fed held its benchmark interest rate at 5.25%–5.50% for the fifth consecutive meeting. This decision signaled a cautious approach amid uncertain economic signals. Fed Chair Jerome Powell reiterated a “wait and see” stance and emphasized the importance of evaluating additional data before making adjustments.

At the same time, ongoing trade tariffs from the White House continued to disrupt supply chains and impact pricing. This backdrop complicates the Fed's policy deliberations, as its dual mandate of controlling inflation and promoting stable employment faces renewed strain.

Financial markets responded sharply to the inflation data. Gold prices fell as investors shifted to safe-haven assets amid heightened uncertainties. According to Reuters, spot gold was down 0.1% at $2,308.07 per ounce, while U.S. gold futures settled 0.2% lower.

Political turmoil also pressured market sentiment. Former President Donald Trump criticized Powell on Truth Social, calling him "TOO LATE, TOO STUPID, & TOO POLITICAL.” Trump consistently opposed the Fed Chair’s cautious strategy and blamed central bank actions for economic stagnation.

Meanwhile, consumer data highlighted additional challenges. Wage and salary growth increased by 0.5% in June, the slowest monthly increase since November 2025. The personal savings rate fell to 3.8%. These trends suggest rising prices are increasingly straining households, which adds urgency to inflation-control measures.

As of July 31, 2025, 16:00 Universal Time Coordinated (UTC), Ethereum (ETH) traded at $2,048 with 1.7% growth in 24-hour trading volume, while Bitcoin (BTC) edged up 0.9%, trading at $38,240, according to CoinMarketCap.