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.

Christopher Waller, a potential contender to be the next chair of the central bank, said the Federal Reserve should not wait for the labor market to weaken to reduce interest rates.

The Bureau of Labor Statistics reported that the consumer price index (CPI), a popular inflation gauge, increased in June to 2.7% on an annual basis as prices rose for consumers.

Federal Reserve Governor Christopher Waller said on Thursday (Jul 17) he continues to believe the US central bank should cut interest rates at the end of this month amid mounting risks to the economy

With June's inflation reading coming in hotter than the month prior, the Fed is under renewed pressure to maintain its current target range for the federal funds rate. Analysts now see little chance of a rate cut in the near term. That means HELOC borrowers are unlikely to see significant rate drops anytime soon.

What’s being overlooked in the pyrotechnics over the Federal Reserve is the most important issue of all: the integrity and stability of the dollar.

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.

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.

If you're thinking about tapping your home's equity, make sure you understand what could happen with rates soon.