The Federal Reserve is widely expected to hold interest rates steady next week, with investors focused on new central bank projections that will show how much weight policymakers are putting on recent soft data and how much risk they attach to unresolved trade and budget issues.

The Consumer Price Index rose 2.4 percent in May, from a year earlier, a reading that reflects only the initial impact of President Trump’s tariffs.

Inflation moved up in May as Trump's tariffs threatened to filter into consumer prices, CPI report shows. Gasoline prices declined for fourth month

Consumer prices rose 2.4% over the year, and the month-over-month increase was lower than expected.

Consumer prices showed little sign of tariff-related increases for the third month in a row, defying expectations of a significant rise in inflation tied to ongoing U.S. trade wars.

Forecasters say underlying US inflation likely picked up in May, reflecting a modest impact from tariff pass-through for goods that are mostly imported, while some services like airfares saw smaller price gains or outright declines.

CPI report shows that President Trump's whipsaw tariff policies have not had an outsized impact on inflation, but economists remain on guard.

Both the Senior Citizens League, an advocacy group for older adults, and independent Social Security and Medicare analyst Mary Johnson expect the 2026 COLA to be 2.5%, up from their forecasts of 2.4% last month. The average COLA, which is calculated using a formula based on consumer prices, has been 2.6% over the past 20 years.