Higher-than-expected core CPI likely pushes back Fed rate cuts

A measure of underlying US inflation topped forecasts for a third straight month in March, signaling persistent price pressures that will likely delay any Federal Reserve interest-rate cuts until later in the year.

The so-called core consumer price index, which excludes food and energy costs, increased 0.4% from February, according to government data out Wednesday. From a year ago, it advanced 3.8%, holding steady from the prior month.

Economists see the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.4% from the prior month and 3.5% from a year ago, an acceleration from February that was boosted by higher energy prices, Bureau of Labor Statistics figures showed.

Wednesday’s report adds to evidence that progress on taming inflation may be stalling, despite the Federal Reserve keeping interest rates at a two-decade high. With a strong labor market still powering household demand, officials have been adamant they’d like to see more evidence that price pressures are sustainably cooling before lowering borrowing costs.

Treasury yields and the dollar jumped while S&P 500 index futures tumbled. Swaps traders slashed the degree to which they see the Fed will cut rates this year.

Related Topics: CPI data, Fed rate cuts, Federal Reserve