Trump’s first inflation report expected as risk investors look for signs of slowing growth
James Van Straten | Edited by Sheldon Rebeck on March 11, 2025, 10:07 UTC
Wednesday’s consumer price index (CPI) report will be the first of Donald Trump’s presidency, and signs of a slowdown could boost the chances of an interest rate cut, boosting sentiment among risk investors who have suffered losses in recent weeks.
The Bureau of Labor Statistics projects that year-over-year headline inflation will decline to 2.9% from 3%, while core inflation, which excludes food and energy prices, will also fall 0.1 percentage point to 3.2%.
Slowing inflation raises the prospect of rate cuts, making riskier investments more tempting. The CPI, which tracks the cost of a basket of goods and services in the U.S. economy, has been rising for four straight months.
In recent weeks, the S&P 500 has fallen nearly 10% from its all-time high, and Bitcoin (BTC) has lost about 30%, falling to around $80,000.
Both Trump and Treasury Secretary Scott Bessent have emphasized the need to lower 10-year Treasury yields to lower the federal funds rate. So far, that strategy appears to be working: the 10-year yield has fallen from 4.8% to 4.2%, the dollar index (DXY) has fallen below 104, and the price of WTI crude oil has stabilized around $60, in line with the administration’s economic plans.
Meanwhile, the inflation index reached 1.35%, the lowest level since September 2020. However, five- and ten-year inflation expectations remain above 2%, indicating that Trump still has much to do to manage long-term inflation expectations.
At the Federal Open Market Committee (FOMC) meeting on March 18-19, Chairman Jerome Powell is expected to keep the federal funds rate at 4.25%-4.50%, according to the CME FedWatch Tool.
Investors will be watching the inflation report cautiously, as a lower-than-expected result could prompt the Federal Reserve to consider cutting rates. In contrast, a hot inflation figure is likely to keep rates higher for longer, putting additional pressure on risk assets.
Your email address will not be published. Required fields are marked *
[…] January 2022, the number of cryptocurrencies existing in the market increased by 1 thousand. This implies that each new…
Your writing is like a breath of fresh air in the often stale world of online content. Your unique perspective…
I would like to share my story and express my great gratitude to Maria. My husband Alexander was literally taken…