Rose Less Than Expected in April

Inflation eased a bit more in April with the year-over-year headline Consumer Price Index rate falling to its slowest pace in more than four years.

The April CPI rose 0.2%, according to the Bureau of Labor Statistics. That’s less than economist forecasts for 0.3%, though up from -0.1% in March. On a year-over-year basis, CPI was higher by 2.3%, the slowest amount since February 2021. Forecasts had been for 2.4% and March’s pace was 2.4%.

Core CPI, which strips out food and energy costs, rose 0.2% in April, up from 0.1% in March, but less than 0.3% expected. Core CPI year-over-year rose 2.8%, flat from March and in line with forecasts for 2.8%.

Bitcoin (BTC) added modestly to some overnight gains, trading at $103,800 in the minutes following the fresh data.

U.S. stock index futures swung from small losses to small gains after the print and the 10-year Treasury yield dipped one basis point to 4.44%.

Fed still likely on hold

While the CPI numbers offer a bit of welcome evidence on slower inflation, they’re not likely to change the calculus with respect to Federal Reserve rate cuts.

With the tariff panic getting further and further into the rearview mirror, market participants are quickly pulling bets on Fed easing action. According to CME FedWatch, there’s currently just an 11% chance of a June rate cut, down from 80% one month ago.

Even July is no longer looking likely. There’s currently a 62% chance the Fed remains on hold through that month versus just a 7% chance one month ago.

Throughout the spring and at his post-meeting press conference last week, Fed Chair Jay Powell indicated the central bank is in no rush to take any action on rates. With the China tariff deal over the weekend and this fresh inflation news, that policy stance is looking more and more vindicated.