The US CPI slowed slightly in April, and the core CPI fell to the lowest record in three years year on year, reviving expectations of interest rate cuts — US bonds and US stock futures rose in response, and the US dollar fell. Swap market traders believe that by the September Federal Reserve meeting, the probability of cutting interest rates by 25 basis points is over 80%.

However, New Federal Reserve News Agency and Wall Street Journal reporter Nick Timiraos later wrote an article pointing out that the market may be too optimistic, and the Federal Reserve may still not cut interest rates until September.

As far as it is concerned, Wednesday's data is not enough to change the Fed's expectations on whether and when to start cutting interest rates. Interest rate cuts will affect borrowing costs for the entire economy.

However, analysts say there is little in the report that can rekindle concerns about interest rate hikes, so the Federal Reserve can more easily stand still at next month's meeting.

Since two (CPI) reports are likely to be needed to bolster the confidence of officials that inflation can return to the low levels before the pandemic, the Federal Reserve may not cut interest rates until September.

Even if inflation falls somewhat, this may not satisfy the Federal Reserve. Overnight, Federal Reserve Chairman Powell said in a speech in Amsterdam that the first quarter data reduced his confidence in cooling inflation, so the Federal Reserve was unable to say whether or when interest rates could be lowered.

Timiraos said millions of Americans are still facing tremendous price pressure. Gasoline prices are driving up overall inflation, while housing costs continue to rise. However, the year-on-year increase in rents was slower than a month ago, which indicates that a key driver of inflation is slowing down.

Editor/Jeffrey