I think April’s CPI will finally start to show that bite from the recent tariff truce with China, but only modestly. My base case is a 0.3 percent uptick in the headline index month-over-month, pushing year-over-year inflation up to about 2.2 percent. The pause in new duties should take some heat off headline inflation by easing imported goods prices, but we’ll still see lingering pass-through from the levies already in place—especially on autos and consumer electronics, where supply chains are still adjusting. Core CPI, which strips out food and energy, likely edges up by 0.2 percent, reflecting slightly firmer services inflation but a subtle cooling in goods. In short, we’re not looking at a sudden jump—inflation remains under control by historical standards—but we will see the first signs that tariffs are working their way into the data. That should keep the Fed cautiously on hold for now, yet mindful that trade policy remains a wild card. If we get a hotter read than 0.3 percent, expect market chatter about a tilt back toward tightening; a cooler print, by contrast, could reinforce a more dovish outlook.
