Consumer prices in the US increased beyond expectations in March.

In March, consumer prices in the United States rose beyond anticipated levels due to higher gasoline and shelter costs, raising additional uncertainty regarding the Federal Reserve’s potential decision to initiate interest rate cuts in June.

According to the Bureau of Labor Statistics (BLS) within the Labor Department, the consumer price index increased by 0.4% last month, following a similar rise in February.

More than half of the Consumer Price Index (CPI) increase was attributed to rising gasoline and shelter costs, which encompass rents.

The Federal Reserve of the United States has set a 2% inflation target. However, the indicators it monitors for monetary policy are significantly lagging behind the CPI rate.

After witnessing robust job growth in March, along with a decline in the unemployment rate to 3.8% from February’s 3.9%, certain economists have postponed expectations for rate cuts to July.

However, some still anticipate the Federal Reserve to act in June. A minority believe that the opportunity for rate cuts may be diminishing.

On multiple occasions, Federal Reserve Chair Jerome Powell has emphasized that the U.S. central bank is not in a hurry to commence reducing borrowing costs.

According to CME’s FedWatch Tool, financial markets indicated a likelihood of approximately 56.0% for the Federal Reserve to lower rates at its policy meeting scheduled for June 11-12. The Fed has maintained its policy rate within the range of 5.25% to 5.50% since July. It has increased the benchmark overnight interest rate by 525 basis points since March 2022.