What is clear is that the current 4.33% median Fed funds target rate remains well above the inflation trend. Even after the acceleration in consumer prices in June, the policy rate is roughly 1.4 percentage points above headline CPI’s one-year change – close to the biggest gap post-pandemic.

The inflation gauge the Federal Reserve relies on most to decide whether to raise or lower U.S. interest rates is likely to cement a decision by the central bank to stand pat at its next meeting at the end of July.

Rising prices across an array of goods from coffee to audio equipment to home furnishings pulled inflation higher in June in what economists see as evidence of the Trump administration's increasing import taxes passing through to consumers.

CPI data reveals inflation trends, with core at 2.9%. Service sector inflation rises, suggesting the Fed may hold rates steady through year-end. Read more here.

Some investors had clung to a bit of hope that the Federal Reserve would cut interest rates at its next meeting on July 30. Tuesday's report on inflation brought the chances of that down even further.

The Indian rupee fell on Wednesday as the latest U.S. inflation report showed that tariffs were beginning to feed into prices, weakening bets on rate cuts by the Federal Reserve, which lifted U.S. Treasury yields and the dollar.

The producer price index for total final demand was unchanged in June, the Bureau of Labor Statistics reported.

A busy week ahead for investors will see inflation data, the debate about the Fed's next move, and the start of second quarter earnings season all come into focus after a flurry of trade activity last week.