Today is the big day of the week, as traders and investors await the US March CPI inflation report. The FED has been trying to sound balanced, not giving any reason to markets about a rate hike, but they’re not announcing the start if interest rate cuts either, which has left the USD in limbo, however, today’s CPI inflation report might change the situation.

Some analysts forecast a slight deceleration in the US core CPI for April, projecting a lower increase in March, slightly below the consensus estimate of 0.3%. This projection implies a moderation from the average 0.37% growth observed in Q1, potentially influencing future monetary policy decisions in a dovish direction.

There is a possible easing in inflationary pressures, which could diminish the urgency for aggressive monetary tightening measures. If the actual data confirms this modest slowdown, it may prompt the Federal Reserve to maintain a more likely approach to interest rate hikes.

Goldman Sachs Predictions for the US April CPI

• In April, the Core CPI is projected to increase by 0.28%, which is lower than the average of 0.37% seen in the first quarter.
• Transportation Costs: Airfares are expected to decline by 2.5%, while used car prices may decrease by 0.8%, and new car prices are anticipated to remain stable.
• Housing Costs: Rent is forecasted to rise by 0.37%, while Owners’ Equivalent Rent (OER) is expected to increase by 0.45%.
• Insurance and Services: Car insurance rates are likely to decrease to 1.6% (down from 2.6% in March), while health insurance rates are expected to remain unchanged.
• Tax preparation services could see a 2 basis point increase.
• Energy and Food Costs: Energy costs are projected to increase by 1.7%, and food prices may rise by 0.3%, contributing to an overall headline CPI gain of 0.37%.
• Annual Core CPI Adjustment: This forecast would result in a two-tenths reduction in the year-on-year change in the core CPI to 3.6%.