The U.S. CPI decreased in March, with core inflation rising slightly by 0.1%.

Inflation Data Suggests Stability, But Tariff Announcements Could Change Fed’s Path

U.S. inflation data for March shows a slight decline in the Consumer Price Index (CPI), with core inflation barely rising, fueling debates on whether the Federal Reserve might resume its rate-cutting strategy in May. However, these figures were released before last week’s tariff developments, which could affect the Fed’s decision in the coming months.

The CPI fell by 0.1% in March, contrary to the expected 0.1% increase, after February’s 0.2% gain. On a year-over-year basis, the CPI increased by 2.4%, lower than the projected 2.6% and down from February’s 2.8%.

Core CPI, which excludes volatile food and energy prices, rose by only 0.1%, much less than the anticipated 0.3%, and below the 0.2% increase in February. Year-over-year, core CPI rose by 2.8%, below the expected 3% and down from 3.1% in February.

Bitcoin (BTC) saw a modest uptick following the data, briefly surpassing $82,000. However, U.S. stock index futures were under pressure Thursday morning, with the Nasdaq 100 down by 2.7% and the S&P 500 falling 2.1%.

It’s important to note that these inflation numbers reflect conditions before President Trump’s tariff pause last week, which triggered a temporary market recovery. Before that announcement, traders had been pricing in a higher chance of a rate cut at the Fed’s May meeting, but those expectations have dropped to 17%. Now, attention is shifting toward June, with a 75% chance of a rate cut of at least 25 basis points by then.

As the markets digest the latest data, Friday’s Producer Price Index (PPI) report could offer additional insights into inflation trends and influence the Fed’s upcoming policy decisions.