Special topic: us April CPI shows inflation cooling to boost expectations of interest rate cuts in September

A measure of underlying US inflation cooled for the first time in six months in April100spinscoinmasterFor Fed officials seeking to cut interest rates this year100spinscoinmasterThis is undoubtedly a small step in the right direction.

The so-called core consumer price index, which excludes food and energy costs, is up 0% from March, according to official data released on Wednesday.100spinscoinmaster.3%. The index had exceeded expectations three times in a row, raising concerns that inflation had become entrenched. The year-on-year increase also fell to its slowest pace in three years, according to the Bureau of Labor Statistics.

The Fed is trying to disrupt price pressures by weakening demand across the economy. A separate report released on Wednesday showed that retail sales stagnated in April as high borrowing costs and rising household debt prompted consumers to be more cautious.

While the data may give the Fed some hope that inflation is resuming its downward trend, officials will want to see more data to build the confidence they need to start thinking about cutting interest rates. Chairman Jerome Powell said Tuesday that the Fed needs to be patient to let restrictive policies work. Some policy makers do not expect interest rates to be cut this year at all.

"this really opens the door to a potential rate cut later this year," said Kathy Jones, chief fixed income strategist at Schwab Financial. "the Fed will have to see more data showing falling inflation before it takes action."

Treasury yields fell, the S & P 500 rose and the dollar weakened. Traders raised the probability of a rate cut in September to about 60 per cent.

Index

Actual situation

Estimate

CPI ring ratio

+ 0100spinscoinmaster.3%

+ 0.4%

Core CPI ring ratio

+ 0.3%

+ 0.3%

CPI year-on-year

+ 3.4%

+ 3.4%

Core CPI year-on-year

+ 3.6%

+ 3.6%

Core CPI has risen at an annual rate of 4.1% over the past three months, the lowest since the beginning of the year.

Economists believe that core inflation is a better reflection of underlying inflation than overall CPI. The latter rose 0.3% month-on-month and 3.4% year-on-year, according to the Bureau of Labor Statistics. The report says spending on housing and gasoline accounted for more than 70% of the increase.

In addition, services such as car insurance and medical care also contributed to the rise of CPI again. Clothing prices rose the most since June 2020.