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US inflation fell more than expected to 2.4 per cent in March, as the Federal Reserve grapples with how to respond to President Donald Trump’s abrupt U-turns on tariffs.
Thursday’s annual consumer price index figure from the Bureau of Labor Statistics was below both February’s reading of 2.8 per cent and the 2.5 per cent forecast by economists polled by Bloomberg.
The Fed faces a dilemma over whether to cut rates to prevent a possible slowdown triggered by Trump’s sweeping tariffs on US trading partners, or hold them higher to pre-empt a resurgence of inflation.
On Wednesday, the US president announced that he would pause steep “reciprocal” tariffs on US trading partners for 90 days. The move sent US stocks soaring, with the S&P 500 posting its best day since 2020.
However, China was denied a pause and its rate increased to 125 per cent, while the 10 per cent tariffs already imposed on most countries remained in place.
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