U.S. Inflation Slows Further in April as CPI Rises 0.2%, Annual Rate Hits Four-Year Low
Inflation eased slightly in April, with the year-over-year Consumer Price Index (CPI) dropping to its slowest pace in more than four years.
The Bureau of Labor Statistics reported a 0.2% increase in April’s CPI, below economist expectations of a 0.3% rise, though slightly up from March’s -0.1%. On a year-over-year basis, CPI was up by 2.3%, marking the lowest rate since February 2021. Analysts had anticipated a 2.4% increase, and the March pace had also been 2.4%.
Excluding volatile food and energy prices, the core CPI rose 0.2% in April, slightly higher than March’s 0.1% but below the expected 0.3%. The core CPI’s year-over-year increase remained steady at 2.8%, matching forecasts and unchanged from March.
Following the release of the data, Bitcoin (BTC) saw a modest increase, trading at $103,800. U.S. stock index futures flipped from minor losses to slight gains, while the 10-year Treasury yield dipped one basis point to 4.44%.
Fed Likely to Hold Steady on Rates
While the CPI data provides further evidence of slowing inflation, it is unlikely to significantly influence expectations for Federal Reserve rate cuts in the near future.
As concerns over tariffs continue to fade, market participants have reduced their bets on a Fed rate cut. According to CME FedWatch, there is now only an 11% chance of a rate cut in June, a significant drop from the 80% probability just a month ago.
Even the possibility of a rate cut in July is diminishing. There is currently a 62% chance that the Fed will keep rates unchanged through that month, up from just 7% a month ago.
Fed Chair Jay Powell, speaking throughout the spring and following the central bank’s most recent meeting, has emphasized that the Fed is in no rush to make changes to interest rates. With the recent China tariff agreement and the latest inflation figures, the Fed’s cautious approach seems to be increasingly validated.
