Disinflation in Motion March CPI Drops But the Fed Remains on Hold

#CPI Data Drops
U.S. March CPI Cools to 2.4% YoY Why Aren’t Markets Cheering Yet?
The unadjusted U.S. Consumer Price Index CPI for March slowed to 2.4% YoY down from 2.8% in February and lower than market expectations of 2.6%. While this signals disinflation is gaining traction the market reaction has been muted. Why?
Let’s break it down
Inflation is Cooling But the Core Issue Remains
The headline CPI drop is a positive sign but the Fed focuses more on Core CPI which excludes volatile food and energy prices. If Core inflation remains sticky especially in services the Fed may delay rate cuts despite headline improvements.
Bottom line The drop to 2.4% helps the rate cut narrative but it’s not a green light yet.
Fed Rate Cut Expectations: Cautiously Optimistic
Before this print the market had already scaled back aggressive rate cut bets due to stronger labor data and sticky Core inflation. This CPI may revive the case for a cut in the second half of 2025 possibly starting in September
Fed Funds Futures now show a slightly higher probability of one cut in H2 2025
The Fed will likely wait for multiple months of soft inflation prints before acting.
Watch Upcoming Core PCE data a Fed favorite will be crucial.
Crypto Market Caught in Crosswinds
Crypto thrives on liquidity expectations. A cooler CPI supports the narrative of looser monetary policy eventually but since the Fed isn’t pivoting immediately crypto has seen muted upside so far.
Bitcoin and Ethereum showed brief upticks but failed to hold gains.
Altcoins remain largely sideways as the macro remains uncertain.
However if disinflation persists it could open the door to mid year Fed cuts which would be bullish for crypto in the medium term.
CPI cooling Good
Muted market Reality check
Fed rate cuts is equal to Still data dependent
Crypto is equal to Waiting for liquidity confirmation
We’re at a delicate point in the macro cycle. Patience will be key for both policymakers andMarket