US Inflation Slows to Two-Year Low, Fed May Still Raise Rates in May
US inflation has slowed to the lowest level in almost two years. However, the rise in core prices, which excludes the volatile costs of energy and food, may still put pressure on the Federal Reserve to go ahead with another interest rate increase in May.
The Bureau of Labor Statistics reported that the consumer price index for March increased by 5% YoY, a significant decline compared to the 6% in February and the lowest level since May 2021.
Meanwhile, core CPI rose by 5.6% YoY, following a 0.4% monthly rise. This indicates that the prices of certain goods and services are still elevated.
In March, several indexes experienced an increase, including shelter, airline fares, household furnishings and operations, new vehicles, and motor vehicle insurance. However, the indexes for medical care and used cars and trucks decreased over the same period.
This reading was slightly lower than the expected 5.7% estimated by a panel of 25 economists polled by Bloomberg.
The latest inflation data is crucial as the Federal Reserve prepares for its upcoming policy meeting in May. The March jobs report showed that the labor market remains strong, despite a drop in monthly job creation.
However, there is currently no consensus among Fed officials as to whether another quarter-point rate rise is necessary before the central bank can end its aggressive monetary policy campaign against high inflation.
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While some officials support another rate increase, others have urged a cautious approach, including Austan Goolsbee, the President of the Chicago Fed and a voting member of this year’s policy-setting Federal Open Market Committee.
The cryptocurrency market has not reacted to the data, as Bitcoin (BTC) is currently trading at $30,250 after a 0.5% increase in the past 24 hours.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
