US CPI comes in lower than expected — Are rate cuts coming?

The latest US core Consumer Price Index (CPI) print, a measure of inflation, came in lower than expected at 3.1%, beating expectations of 3.2%, with a corresponding 0.1% drop in headline inflation figures.

According to Matt Mena, crypto research strategist at 21Shares, the cooling inflation data adds to the likelihood that the Federal Reserve will cut interest rates this year, injecting much-needed liquidity into the markets and sending risk-on asset prices higher. Mena added:

“Rate cut expectations have surged in response — markets now price a 31.4% chance of a cut in May, up over 3x from last month, while expectations for three cuts by year-end have jumped over 5x to 32.5%, and four cuts have skyrocketed from just 1% to 21%.”

Despite the better-than-expected inflation numbers, the price of Bitcoin (BTC) declined from over $84,000 at the daily open to now sit around $83,000 as traders grapple with US President Donald Trump’s trade war and macroeconomic uncertainty.

Federal Reserve, Economy, United States, Inflation, Interest Rate

A majority of market participants believe the Federal Reserve will cut interest rates by June 2025. Source: CME Group

Is President Trump crashing markets to force rate cuts?

Federal Reserve Chairman Jerome Powell said on several occasions that the central bank is not rushing to cut interest rates — a view echoed by Federal Reserve Governor Christopher Waller.

During a Feb. 17 speech at the University of New South Wales in Syndey, Australia, Waller said the bank should pause interest rate cuts until inflation comes down.

These comments were met with concern from market analysts, who say that a lack of rate cuts might trigger a bear market and send asset prices plummeting.

On March 10, market analyst and investor Anthony Pompliano speculated that President Trump was intentionally crashing financial markets to force the Federal Reserve to lower interest rates.

The US government has approximately $9.2 trillion in debt that will mature in 2025 unless refinanced. Source: The Kobeissi Letter

According to The Kobeissi Letter, the US government needs to refinance roughly $9.2 trillion in debt before it reaches maturity in 2025.

Failure to refinance this debt at lower interest rates will drive up the national debt, which is currently over $36 trillion, and cause the interest payments on the debt to balloon.

Due to these reasons, President Trump has made interest rate cuts a top priority for his administration — even at the short-term expense of asset markets and business.

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