U.S. inflation data came in hotter than expected on Wednesday, reinforcing expectations that the Federal Reserve will keep interest rates steady between 350 and 375 basis points not only at its June 17 meeting but also likely through the end of the year.
The Consumer Price Index (CPI) increased by 3.8 year over year% in April, according to a report from the Bureau of Labor Statistics. Economists were expecting an increase of 3.7% after the 3.3% increase recorded in March.
Month over month, the CPI rose 0.6%, above expectations of 0.3% and up from 0.2% in March.
The core CPI, which excludes food and energy costs, rose 0.4% in April versus a forecast of 0.2% and 0.3% in March. The year-over-year core CPI rose 2.8% compared to forecasts of 2.7% and 2.6% in March.
Under pressure this morning, bitcoin was trading at $80,700 following the report, down 1.2% in the past 24 hours.
U.S. stock index futures fell across the board and the 10-year Treasury yield rose to 4.44%. WTI crude oil poses a threat to the markets and is up 3% on the day at $101.
Before the CPI data was released, markets were pricing in a 98% chance that the Federal Reserve would leave interest rates unchanged at its March meeting, according to the CME Fed Watch tool.
Kevin Warsh is expected to be confirmed as the next chairman of the Federal Reserve this week, as he is expected to succeed Jerome Powell on May 15.
