Key points

• U.S. CPI rose more than expected in March, with an annualized increase of 3.5%.
• Core CPI climbs to 3.8%, reflecting broader inflation trends.
• Rising Inflation Could Affect Fed's Interest Rate Decision.

Overall inflation rises beyond expectations

The Consumer Price Index (CPI) in the United States showed an unexpected increase in March, indicating that inflationary pressures continue to exist. The CPI, which includes various goods and services, has risen by 0.4% within a month. This surge has pushed the annual inflation rate to 3.5%, exceeding the forecast of Dow Jones economists who predict a more moderate monthly increase of 0.3% and an annual growth rate of 3.4%.

Core CPI exceeded expectations

After excluding volatile sectors such as food and energy, the core CPI also showed significant growth. It rose by 0.4% within a month, exceeding the expected growth of 0.3%. On an annual basis, this core indicator has risen to 3.8%, exceeding the expected 3.7%. The accelerated rise in core prices indicates a broad inflation trend, not limited to volatile market sectors.

Market impact and short-term forecasting

This unexpected inflation rate indicates that inflation is still stubborn and may force the Federal Reserve to maintain a more firm stance on interest rates. This will lead to increased volatility in the stock and foreign exchange markets, as traders need to adapt to sustained inflation conditions.

In the short term, this may lead to pessimistic sentiment in the stock market, as investors weigh the impact of sustained high inflation and the possibility of the Federal Reserve continuing to adopt aggressive monetary policy. On the contrary, this environment may fuel a bullish trend in commodity markets, especially in traditional anti inflation assets such as gold.

Overall, traders should be prepared to cope with the increasing sensitivity of the market to inflation data and central bank reactions. The unexpected surge in inflation highlights the importance of staying vigilant in a market environment where traditional predictive factors may not be entirely consistent with the evolving economic reality.