U.S. Inflation Eased to 3.4% in April

U.S. inflation eased in April, with a key measure of price pressures slowing to its lowest level since spring 2021.

The consumer-price index, a gauge for goods and service costs across the U.S. economy, rose 3.4% in April from a year ago, the Labor Department said Wednesday. So-called core prices that exclude volatile food and energy items climbed 3.6% annually, the lowest increase since April 2021.

Investors saw positive signs in the report that the Federal Reserve’s inflation fight is gradually slowing down the U.S. economy. The yields on 10-year Treasurys, which fall as prices rise, ticked lower. Stock futures advanced, continuing their march higher in May.

That string of hot data upended projections from Washington to Wall Street that the Federal Reserve would quickly slash interest rates in the coming months. The fear is that keeping monetary policy tighter to reach the Fed’s 2% inflation goal could weaken job growth and risk a recession.

“We did not expect this to be a smooth road,” Fed Chair Jerome Powellsaid at a moderated discussion in Amsterdam on Tuesday. He added that the central bank will need to “be patient and let restrictive policy do its work.”