Inflation came in cooler than expected in March, leaving Fed officials and Wall Street divided over the path for rate hikes

Hot off the BLS press… The US just got its inflation report card for March, and the results were… interesting. Consumer prices rose 0.1% for the month, but less than Wall Street’s expected 0.2% climb. Stocks were mixed after the #s dropped, as investors questioned whether the mellower-than-expected data could (finally) lead to a rate-hike pause. The report's timing is key: yesterday’s inflation data came after March’s banking blowup and before the Fed’s expected early-May rate decision.

• Sunny side up: Grocery prices fell 0.2% in March, marking the first decline since 2020. Egg prices also started to crack, plunging more than 10% from February highs.

• Upside down: Rising shelter prices (like: rent, hotel costs) were the main driver of rising consumer prices, even as rent growth cooled.

The great rate-hike divide… Fed Chair Powell has been loud about staying the course of raising rates to crush inflation. Despite that, earlier this month banking worries and underwhelming labor data had traders betting on only a 43% chance that the Fed would hike interest rates in May. After yesterday's mixed report (think: still high inflation that's showing signs of easing), those odds stood at nearly 70%. Muddying things, earlier this week two Fed presidents expressed contrasting views over whether more hikes would be needed to curb inflation.