Bankinter | US inflation eased more than expected in March. The CPI growth slowed to 2.4% year-on-year (March) from 2.8% in February (against 3.0% in January) and is below the expected 2.5%. This is the lowest level since September 2024. The falls in Energy Products (down 3.3% year-on-year) and Petrol Prices (down 9.8%) are particularly noteworthy. The Core Rate, which excludes the most volatile items (energy and food), also fell. It stands at 2.8% compared to 3.0% expected in January and 3.1% in February (3.3% in January).
Bankinter analysis team’s view: Good news, but for how long? The CPI is moderating more than expected, which is always positive, as is the slowdown in the Core Rate. However, the figure does not reflect the initial effects of Trump’s tariff policy, which is expected to encourage price increases to offset the effect of the tariffs. Yesterday we learnt of a 90-day pause in the application of reciprocal tariffs.
In turn, the Fed, in its Minutes of the meeting of 18/19 March, made it clear that they see an increase in risks to inflation and that this may be persistent. Looking ahead to the next Fed meeting (17th April), we still believe that they will not cut rates on this occasion. There is no need to do so and we believe that they will not cut until September and December (25 b.p. on each occasion), leaving rates at 3.75%/4.00%.
