Treasury

Inflation drops to its lowest since spring 2021

A “kick-the-can” moment for the Fed, according to analysts.
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Inflation eased in April, dropping to its lowest level since spring 2021, an era that feels so long enough ago that we can’t even think of some witty pop culture moment to reference that would take you back to that time.

The consumer price index rose 3.4% from last April, the Labor Department said on Wednesday. That was in line with economists’ expectations. Meanwhile, the CPI increased 0.3% from March, which was just below the Dow Jones estimate of 0.4%.

We’ll cut to the question on everyone’s minds here: What does this mean for possible rate cuts?

It’s good news and bad news. While it’s unlikely to change the Fed’s rate cutting plans, there’s at least enough good news to quell fears of future rate hikes, as analysts told the Wall Street Journal. Now, some estimate that September looks like a more likely timeline for the Fed’s potential rate cuts, rather than anytime in the coming months.

"I think it’s very much kind of a Goldilocks, kick-the-can type of print for the Fed,” Blake Gwinn, RBC Capital Markets head of US rates strategy, told Yahoo Finance.

Retail sales were flat for the month, and Gwinn noted that “the softness we saw there [was] certainly a bit of relief for the Fed and I think it's what markets wanted to see to kind of continue, this very, very modest rally that we've seen over the last week.”

“This is the first print in a month that wasn’t hotter than expected, so there’s a relief rally,” Dan North, senior economist at Allianz Trade North America, told CNBC, in reference to the market’s positive reaction to CPI data. “The excitement is a little overdone. This is not Caitlin Clark. She’s exciting, this is not exciting.”

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.