U.S. inflation data came in better than expected on Wednesday, reinforcing expectations that the Federal Reserve will keep interest rates steady at 350-375 basis points not only at its June 17 meeting, but likely also through the end of the year.
The annual Consumer Price Index (CPI) rose 3.8% in April, according to a report from the Bureau of Labor Statistics. Economists’ forecasts were for a 3.7% increase after March’s 3.3% increase.
On a month-on-month basis, the CPI rose 0.6%, above expectations of 0.3% and up from 0.2% in March.
The core CPI, which excludes food and energy costs, rose 0.4% in April compared to forecasts of 0.2% and 0.3% in March. Year-over-year core CPI rose 2.8% versus forecasts of 2.7% and 2.6% in March.
Under pressure this morning, bitcoin was trading at $80,700 following the report, down 1.2% in the last 24 hours.
US stock index futures fell across the board and the 10-year Treasury yield rose to 4.44%. WTI crude oil poses a threat to the markets and is up 3% on the day to $101.
Before the CPI data, markets were pricing in a 98% chance that the Federal Reserve would leave interest rates unchanged at its March meeting, according to the CME Fed Watch tool.
Kevin Warsh will be confirmed as the next chairman of the Federal Reserve this week, as he is expected to replace Jerome Powell on May 15.
