US inflation data came in hotter than expected on Wednesday, reinforcing expectations that the Federal Reserve will keep interest rates steady at 350-375bps, not only at the June 17 meeting but also likely through the end of the year.
The consumer price index (CPI) rose 3.8 year-on-year% in April, according to a report from the Bureau of Labor Statistics. Economists’ forecasts had been for a rise of 3.7%, following March’s rise of 3.3%.
On a month-on-month basis, CPI rose 0.6%, above expectations of 0.3% and up from March’s 0.2%.
Core CPI, which excludes food and energy costs, rose 0.4% in April against forecasts of 0.2% and March’s 0.3%. Year-on-year core CPI was higher at 2.8% versus forecasts of 2.7% and March’s 2.6%.
Under pressure this morning, bitcoin traded at $80,700 after the report, down 1.2% over the past 24 hours.
US stock index futures fell across the board and the 10-year Treasury yield rose 4.44%. WTI crude poses a threat to the markets and is higher by 3% on the day at $101.
Ahead of the CPI data, markets were pricing in a 98% probability that the Federal Reserve would leave interest rates unchanged at its March meeting, according to the CME Fed Watch tool.
Kevin Warsh is due to be confirmed as the next central bank chief this week, as he is expected to take over from Jerome Powell on May 15.
