Inflation rose less than expected in May, a month when the effects of higher tariffs were starting to become more widespread.

Trump has demanded the U.S. central bank lower its benchmark overnight interest rate immediately by a full percentage point, a dramatic step that would amount to an all-in bet by the Fed that inflation will fall to its 2% target and stay there regardless of what the administration does and even with dramatically looser financial conditions.

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

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.

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 and an intensifying conflict in the Middle East.

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

Inflation ticked slightly higher in May, rising 2.4%, in line with expectations, according to the U.S. Consumer Price Index released Wednesday. Prices rose 0.1 percent for the month, according to the Bureau of Labor Statistics. The month-over-month increase is less than expected.

Treasury yield jumped 6.9 basis points on Friday to $4.426, reversing a dip in the immediate aftermath of the attacks.

Israel’s attacks on Iran’s nuclear facilities risk pushing back the timeline for Federal Reserve interest-rate cuts as the US central bank waits to assess any potential impact on inflation, economists said.

Former Treasury Secretary and Federal Reserve Chair Janet Yellen expects inflation to rise to “at least 3% or slightly over” due to tariffs, despite recent encouraging signs of price stabilization. During a CNBC interview,