Goldman still expects U.S. inflation to fall significantly as markets alarmed by recent rise

Goldman Sachs still expects stubbornly high U.S. inflation to ease over the coming months, despite investors slashing bets for Federal Reserve interest rate cuts, after yet another print showed that consumer prices remain sticky.

The consumer price index accelerated at a faster-than-expected pace in March, according to data published Wednesday by the Labor Department’s Bureau of Labor Statistics.

The CPI, a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%. This was an acceleration from the 3.2% hike jotted in February.

The report roiled investor confidence in the Fed’s rate-cut outlook, sent financial markets into retreat and prompted Treasury yields to spike.

Traders now anticipate an initial rate reduction from the U.S. central bank in September, following months of penciling in the June meeting as the likely start of Fed policy easing.

Source: CNBC