The U.S. CPI in April showed a slight slowdown, with the core CPI dropping to its lowest level in three years, reigniting expectations of a rate cut - U.S. bonds, U.S. stock futures rose in response, while the U.S. dollar fell. Market participants believe that the probability of a 25 basis point rate cut by the Fed in September exceeds 80%.
However, a subsequent article by Nick Timiraos from the New York Fed and The Wall Street Journal pointed out that the market may be too optimistic, and the Fed may still not cut rates before September.
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In and of itself, Wednesday's data is not enough to change the Fed's expectations on whether and when to start cutting rates, as a rate cut would affect the borrowing costs of the entire economy.
However, analysts say that there is almost nothing in the report that could reignite concerns about rate hikes, so the Fed may be more relaxed and stay put at the next month's meeting.
As officials may need two more CPI reports to boost their confidence that inflation can return to lower levels before the pandemic, the Fed may not cut rates before September.
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Wall Street News previously stated that even if inflation falls, it may still not be enough to satisfy the Fed. Overnight, Fed Chairman Powell said in a speech in Amsterdam that the first-quarter data has reduced his confidence in cooling inflation, so the Fed cannot determine whether or when it can lower interest rates.
Timiraos stated that millions of Americans still face significant price pressures. Gasoline prices have pushed up overall inflation, while housing costs continue to rise. However, the year-on-year growth rate of rents has slowed compared to a month ago, indicating that a key factor driving inflation is slowing down

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The New York Federal Reserve News Agency pointed out that millions of Americans still face significant inflationary pressures, following the April report, two more CPI reports are needed to boost the confidence of the Federal Reserve

New York Federal Reserve News Agency: The Federal Reserve may still not cut interest rates before September