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Published: May 15, 2024 5 min read
Illustration of a Businessman inflating dollar sign balloon with tire pump

Optimism about the prospects for interest rate cuts increased on Wednesday after new government data showed that inflation is cooling.

The year-over-year inflation rate eased to 3.4% in April after rising 0.3% from the previous month, which was less than expected.

The good news on inflation in the April consumer price index (CPI) report was a welcome development for investors and people hoping for lower mortgage rates. Previously, inflation ticked up to an annual rate of 3.5% in March, which prompted Federal Reserve Chair Jerome Powell to remark about “a lack of further progress” on inflation.

The Federal Reserve committee that sets interest rates meets three times this summer — in June, July and September — and a growing number of analysts are now eyeing that September meeting for the Fed’s first interest rate cut. The Fed is waiting for inflation to show consistent signs of decreasing before it lowers rates.