US inflation spikes 3.5% in March, casting further doubts on Fed’s rate cuts

US inflation had another hot month in March, rising 3.5% — the latest data point that throws doubt on whether the Federal Reserve will actually begin to cut interest rates as early as June.

The figure marks the highest year-over-year increase since December, when the inflation reading came in at 3.4%.

March’s Consumer Price Index — a measure of changes in the costs of everday goods and services — came in a tick higher than the 3.4% headline inflation figure economists surveyed by FactSet expected, and edged higher from February’s 3.2% reading.

The reading is likely be cold comfort for Fed officials, who have reiterated that they are working to tamp inflation down to 2% — a figure the US economy has not seen in more than a decade.

When inflation persists as it has in recent months despite the current 22-year high benchmark federal funds rate, the Fed has traditionally hiked interest rates even further in an effort to slow the economy.

Fed officials have already signaled that a rate cut may no longer be in the cards for 2024.