US inflation cools again - but Fed won't be rushed to cut rates
June 12, 2025 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas, including gold and silver stocks issues market commentary from deVere Group.
Markets are eyeing the Federal Reserve with fresh optimism after US inflation (CPI) data came in just below expectations for the fourth straight month - but investors should not expect a rate cut just yet, warns the CEO of one of the world's largest independent financial advisory and asset management organizations.
The May Consumer Price Index (CPI) showed annual inflation at 2.4%, matching forecasts but undershooting April's 2.5%.
Core inflation eased slightly to 2.8% year-on-year, versus the expected 2.9%. Both headline and core readings point to gradual disinflation - but the Fed is unlikely to move quickly, says deVere.
Nigel Green, CEO of deVere Group, comments: "Inflation is cooling - but not decisively - and with tariffs now feeding back into prices while the real economy is slowing, the Fed finds itself boxed in.
"We expect the central bank to stay on hold next week and likely through the summer. Even if markets begin pricing in cuts again, September remains uncertain."
The inflation data follows a resilient US jobs report last Friday, which showed continued tightness in the labour market despite signs of economic softening.
"Wage growth is still strong. Consumer demand is still running. But at the same time, business investment is faltering and debt issuance is surging. It's a precarious balance," says the deVere chief executive.
He notes that while markets may interpret the below-forecast inflation numbers as a green light for easing, it is premature.
"Today's data is helpful - but not decisive. The Fed wants to see a consistent, broad-based decline in inflation across services and goods before cutting. We're not there yet."
In the meantime, tariffs are acting as a counterforce to disinflation, especially as a federal appeals court ruled Tuesday that President Trump's "Liberation Day" tariffs could stay in force while it considers whether the White House has the legal authority to impose the levies.
"Tariffs are inflationary by design. They're now pushing against the Fed's disinflation goal at exactly the wrong moment - just as growth indicators begin to crack," warns Nigel Green.
Against this backdrop, the deVere CEO urges investors to reassess portfolios urgently.
"Markets are walking a tightrope. Betting heavily on near-term rate cuts could be costly. Investors should remain positioned for policy stagnation, not relief."
He adds: "Sectors with real pricing power and cost flexibility - such as automation, energy, and selected infrastructure - remain attractive. At the same time, the debt-heavy, rate-sensitive parts of the market are at risk."
deVere also continues to flag concerns in the bond market. "With US debt issuance at record levels and foreign demand weakening, yields are likely to stay elevated. That has major implications for asset pricing and refinancing risk across the economy," says Nigel Green.
The firm advises clients not to stay in cash. "Opportunities exist, especially globally. But you have to be active. Sitting on the sidelines might feel safe, but inflation still erodes value, and the volatility is creating entry points."
Looking ahead to the second half of the year, deVere expects sentiment to oscillate between hopes for easing and fears of stagnation.
"Markets want a story. Today's CPI gave them a narrative of progress. But the Fed won't cut on sentiment. It will wait for data - and that data remains mixed."
He concludes: "The inflation fight isn't over. The economy is showing cracks. Tariffs are complicating everything. The Fed won't be rushed, but the markets will keep guessing. Our message: don't guess. Get positioned correctly, now."
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