U.S. inflation shows signs of moderating, giving Fed room to pause

U.S. inflation showed signs of moderating in April, giving the Federal Reserve room to pause interest-rate increases soon.

The consumer price index rose by a below-forecast 4.9 per cent from a year earlier, the first sub-5 per cent reading in two years, a Bureau of Labor Statistics report showed Wednesday. Excluding food and energy, the so-called core consumer price index also cooled slightly.

But a narrower price measure often cited by Fed officials — tracking services that have boomed as the pandemic faded — registered the smallest monthly increase since mid-2022, as airfares and hotel costs declined.

U.S. stock futures jumped, Treasuries rallied and the dollar weakened after the report.