The Consumer Price Index in March rose 2.4% on an annual basis, showing progress in the Federal Reserve’s battle to bring down inflation to a 2% rate.
By the numbers
The CPI was forecast to rise 2.6% last month, according to economists polled by financial data firm FactSet. The CPI, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.
March’s report comes after inflation rose 2.8% on an annual basis in February.
Inflation eased last month due partly to lower fuel prices, with gasoline tumbling 9.8% on an annual basis, the U.S. Bureau of Labor Statistics said.
What experts say
Easing inflation combined with President Trump’s announcement yesterday of a 90-day pause in his reciprocal tariffs should help alleviate some concerns for the Federal Reserve when it meets on May 7 to make its next interest rate decision, said Julien Lafargue, chief market strategist at Barclays Private Bank.
But because other tariffs orchestrated by Mr. Trump have recently gone into effect — such as auto tariffs – inflation nevertheless could pick up later this year, experts say.
Yet March’s data is “backward looking” and doesn’t reflect the trade policy changes orchestrated by the Trump administration, noted Kay Haigh, global co-head of fixed income and liquidity solutions in Goldman Sachs Asset Management.
What it means for your money
Despite today’s cooler-than-expected CPI numbers, inflationary risks are still a threat to the U.S. economy, especially as some of Mr. Trump’s tariffs are still in place while others are merely delayed, experts say.
“Going forward, the Fed is likely to face a difficult trade-off as tariff-driven price increases start to feed through to the inflation data and activity remains soft,” Haigh said. “We expect the Fed’s initial reaction to be cautious, but the risks remain that a sharper than expected slowdown in the economy could result in a resumption of the Fed’s easing cycle.”
Three of four economists polled by FactSet expect the Fed will hold rates steady at its next meeting on May 7. The current federal funds — the interest rate banks charge each other for short-term loans — now stands in a range 4.5% to 4.75%.
That means consumers and businesses won’t see any relief on loan rates in the near term, although economists are penciling in cuts later in the year, with the majority forecasting a reduction at the Fed’s June 18 meeting.
Aimee Picchi
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
