US Stock Market: Inflation gathers pace as tariffs, energy costs and AI investment lift price pressures, says Fed

The US Fed's semi-annual monetary policy report shows inflation running at roughly twice the 2% target as of May, with PCE Price Index elevated. The economy expanded at an annualised 2.1% in early 2026, supported by AI infrastructure investment but restrained by a stagnant housing market. The Fed has held rates steady since December, but investors are increasingly pricing in potential rate hikes later in 2026 as policymakers remain divided on the outlook.