US CPI falls short of expectations - is a rate cut coming?

The latest US core Consumer Price Index (CPI), a measure of inflation, came in lower than expected at 3.1%, beating expectations for 3.2%, while the headline inflation figure fell 0.1% accordingly.

Matt Mena, cryptocurrency research strategist at 21Shares, said cooling inflation data increases the likelihood that the Federal Reserve will cut interest rates this year, injecting much-needed liquidity into the market and pushing up risk asset prices. Mena added:

“Rate cut expectations have surged in response – the market now prices a 31.4% chance of a rate cut in May, more than three times higher than last month, while expectations for three rate cuts by the end of the year have jumped more than five-fold to 32.5%, with the chance of four rate cuts surging from just 1% to 21%.”

Despite better-than-expected inflation data, Bitcoin’s price fell from over $84,000 at the daily open to around $83,000 currently as traders grapple with U.S. President Donald Trump’s trade war and macroeconomic uncertainty.

Most market participants believe the Fed will cut interest rates by June 2025. Source: CME Group

Will President Trump force a rate cut by disrupting the markets?

Federal Reserve Chairman Jerome Powell has repeatedly said the central bank is in no rush to cut interest rates — a view shared by Fed Governor Christopher Waller.

On February 17, Waller said in a speech at the University of New South Wales in Sydney, Australia that the central bank should pause interest rate cuts until inflation falls.

The comments raised concerns among market analysts, who said not cutting rates could spark a bear market, sending asset prices tumbling.

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

The U.S. government has about $9.2 trillion in debt that will mature in 2025 if not refinanced. Source: Kobeissi letter

According to Kobeissi's letter, the U.S. government needs to refinance about $9.2 trillion of its debt before it matures in 2025.

Failure to refinance these debts at lower interest rates would push up the national debt, which currently exceeds $36 trillion, and cause a surge in debt interest payments.

For these reasons, President Trump has made lowering interest rates a top priority for his administration—even if it hurts asset markets and businesses in the short term.