U.S. inflation accelerated in April, with the Consumer Price Index (CPI) surging past market expectations and casting doubt on any Federal Reserve interest rate cuts this year. The Bureau of Labor Statistics reported the annual CPI rose 3.8%, above the 3.7% forecast and up from March’s 3.3%. On a monthly basis, CPI jumped 0.6%, significantly higher than the 0.3% estimate and the prior month's 0.2% increase. Core CPI, which strips out volatile food and energy costs, also ran hot: up 0.4% for the month versus an expected 0.3%, pushing the year-over-year core rate to 2.8%—exceeding the 2.7% projection.
The hotter-than-expected data reinforced fears that rising energy prices, partly driven by U.S.-Iran tensions and Brent crude approaching $110 per barrel, are reigniting inflationary pressures. Markets quickly repriced the outlook for Fed policy. According to the CME FedWatch Tool, traders had priced a 98% probability the central bank would leave its benchmark rate unchanged at its June meeting, and the latest numbers now hint at a steady stance through year-end. Some analysts even suggest the Fed, under incoming Chair Kevin Warsh, might consider further tightening if price gains persist.
Traditional markets reacted negatively: U.S. stock index futures fell across the board, and the 10-year Treasury yield climbed to 4.44%. In crypto, Bitcoin BTC slipped 1.2% over 24 hours to trade around $80,700, though it held above the psychologically important $80,000 level. The hot CPI print, together with ongoing geopolitical uncertainty, leaves digital assets vulnerable to a hawkish monetary environment even as they attempt to consolidate near multi-month highs.
