CPI Miss Fuels Speculation: Fed Rate Cut Odds Jump Ahead of April Meeting

Inflation Slowdown Sparks Rate Cut Bets

The latest U.S. CPI report showed core inflation rising at a more moderate pace than anticipated, triggering a swift market re-pricing. Traders are now weighing the possibility of a Federal Reserve rate cut as early as April, breaking from earlier assumptions of a longer wait.

Market Sentiment Shifts Gears

According to CME Group's FedWatch Tool, the odds of a rate reduction in April have climbed to 42%, up from 38% before the data release. While June remains the most probable timeframe, the evolving economic picture is fueling serious debate over an earlier pivot.

• Core CPI cools, easing pressure on central bankers
• Labour market resilience supports gradual policy shift
• Equity markets rally on improved policy outlook

Upcoming retail sales and employment figures will be critical in determining whether the Fed gains enough confidence to act before summer.