U.S. April CPI Rises Less Than Forecast, Easing Tightening Fears

U.S. consumer prices increased at a slower pace than expected in April, reinforcing hopes that inflation is cooling and reducing the urgency for further monetary tightening. The Labor Department said on May 28 that the consumer price index rose 0.3% month-over-month, missing the consensus forecast of 0.4%. The annual rate edged down to 3.4% from 3.5%, also below projections. Core CPI, which excludes food and energy, climbed just 0.2% on the month, compared to an expected 0.3% gain. The softer data bolsters the case for the Federal Reserve to hold rates steady into the autumn and potentially begin cutting borrowing costs. Immediately after the release, S&P 500 futures added to their advance, and the 10-year Treasury yield fell to 4.15%. Market pricing now indicates an 80% probability of a rate cut at the September policy meeting, up sharply from a week ago.