Inflation Appears Tame, But Underlying Pressures Emerge

Mixed Inflation Signals and Fed Leadership in the Spotlight The June Consumer Price Index (CPI) report brought mixed news for markets. While overall inflation appeared moderate—marking the fifth consecutive month of softer-than-expected core readings—some specific consumer categories showed surprising strength. Core goods excluding autos, which are more susceptible to import costs and tariffs, posted their largest price increases in years. Notable month-over-month price jumps included: -Men’s shirts and sweaters: up 4.3% -Floor and window coverings: up 2.2% -Laundry equipment and other appliances: up approximately 2.0% These types of increases typically appear in year-over-year comparisons, making their monthly rise especially noteworthy. As tariff-related uncertainty persists, these sectors may offer an early indication of renewed inflationary pressure. Despite the overall benign tone of the report, the Federal Reserve is expected to hold steady at its next meeting later this month. However, markets were briefly rattled by reports that President Trump was considering replacing Fed Chair Jay Powell. Although the administration walked back the claim, the episode sparked volatility across asset classes: bond yields rose, the dollar weakened, and equities declined. Historically, presidents have expressed frustration with monetary policy behind closed doors, but this level of public scrutiny and potential intervention is rare. Removing a Fed Chair without cause could lead to legal challenges and erode confidence in the Fed’s independence—possibly pushing inflation expectations higher. While certain areas of the economy—such as housing and lower-income households—might benefit from lower interest rates, current economic indicators suggest the overall environment remains resilient. Until more definitive signs emerge, the Federal Reserve is likely to stay the course and avoid aggressive policy shifts. As inflation trends and central bank independence remain in focus, markets are expected to respond swiftly to any new developments. Investors should stay alert as this dynamic unfolds in the coming weeks.Disclosures:EP Wealth Advisors, LLC (“EP Wealth”) is a leading independent registered investment adviser (“RIA”) on a mission to provide clients with honest and objective advice through personalized financial planning, customized investment portfolios, and integrated tax and estate planning. Video Transcripts are provided for information purposes only. Accuracy is not guaranteed. The technology used to generate transcripts may result in omissions, misinterpretations, or other errors. EP Wealth Advisors, LLC is not responsible for discrepancies between the transcript and the original video content.