U.S. Inflation Slows in April with CPI Rising 0.2%, Annual Rate Drops to Four-Year Low
Inflation continued to slow in April, as the year-over-year Consumer Price Index (CPI) fell to its lowest rate in more than four years.
The Bureau of Labor Statistics reported a 0.2% increase in the April CPI, which was lower than economists’ expectations of 0.3%. This marks a rebound from March’s -0.1% change. On a year-over-year basis, CPI rose by 2.3%, the slowest pace since February 2021, falling just short of the forecasted 2.4%. The March CPI had also registered at 2.4%.
Core CPI, which excludes the volatile food and energy sectors, increased by 0.2% in April, up slightly from 0.1% in March, but still under the expected 0.3%. The year-over-year core CPI remained unchanged at 2.8%, in line with expectations.
Following the release of the data, Bitcoin (BTC) saw a modest gain, trading around $103,800, while U.S. stock index futures moved from slight losses to small gains. The 10-year Treasury yield also dipped one basis point to 4.44%.
Fed Likely to Maintain Rates as Inflation Eases
Despite the easing inflation reflected in the CPI data, it is not expected to significantly impact expectations for Federal Reserve rate cuts in the near term.
As concerns over tariffs have subsided, market expectations for a Fed rate cut have diminished. According to CME FedWatch, there is now only an 11% chance of a rate cut in June, a dramatic drop from 80% one month ago.
Looking ahead to July, there is now a 62% chance the Fed will leave rates unchanged, compared to just a 7% chance in April.
Fed Chair Jay Powell has consistently signaled that the central bank is in no hurry to alter rates. With the recent resolution of the China tariff issue and the latest inflation figures, the Fed’s cautious stance is looking increasingly validated.
