U.S. Inflation Slows in April as CPI Rises Less Than Expected, Annual Rate Hits Four-Year Low

U.S. inflation showed signs of easing in April, with the year-over-year Consumer Price Index (CPI) reaching its slowest pace in over four years.

According to the Bureau of Labor Statistics, April’s CPI increased by 0.2%, falling short of economists’ forecast of 0.3%, and reversing the previous month’s slight decline of -0.1%. On a year-over-year basis, the CPI was up by 2.3%, the lowest rate since February 2021. Projections had been for a 2.4% increase, with March’s figure also at 2.4%.

The core CPI, which excludes the more volatile food and energy prices, rose by 0.2% in April, slightly higher than March’s 0.1%, but below the 0.3% increase analysts had anticipated. Year-over-year, the core CPI remained steady at 2.8%, matching expectations and unchanged from the previous month.

In the minutes following the release, Bitcoin (BTC) saw a modest rise, trading at $103,800. U.S. stock index futures turned positive, shifting from slight losses to small gains, while the 10-year Treasury yield ticked down one basis point to 4.44%.

Fed Likely to Maintain Current Rate Policy

While the CPI numbers suggest a slowdown in inflation, they are not expected to significantly alter the outlook for Federal Reserve rate cuts.

With tariff concerns fading, market expectations for Fed action have cooled. According to the CME FedWatch tool, the likelihood of a rate cut in June has dropped to just 11%, down from 80% a month ago.

Even the chance of a rate cut in July seems unlikely, with a 62% probability that the Fed will keep rates steady, compared to just 7% a month ago.

Fed Chair Jay Powell has signaled throughout the spring and in recent comments that the central bank is in no hurry to change rates. With the resolution of the China tariff issue and the latest inflation data, the Fed’s cautious stance appears to be increasingly justified.