The Royal Bank of Canada believes that the US CPI data for April is in line with market expectations, which is a relief, but far from something worth celebrating. The pressure on prices has eased slightly, but is still increasing for the most part because the core indicators are still high. The diffusion index, which measures the extent of price pressure, has changed little since last summer. Compared to the situation before the 2019 pandemic, this still has a lot of room for improvement. In previous communication, Federal Reserve Chairman Powell firmly stated that interest rates are sufficiently restrictive and that more time is needed to further reduce inflation. In light of this, we expect the Federal Reserve to stay on the sidelines for most of this year and then choose to cut interest rates for the first time in late December. Of course, this depends on CPI data continuing to fall during this period.