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Inflation is falling in the USA: has the recession been averted?
US inflation falls to 2.3% in April. Despite rising consumer prices, there is hope for interest rate cuts. Experts analyze.
Inflation is falling in the USA: has the recession been averted?
Inflation pressure in the US experienced a slight decline in April 2025. How finance.net reported that consumer prices rose by 0.2 percent compared to the previous month. Year-on-year inflation is 2.3 percent, which corresponds to a decrease compared to the previous month of 2.4 percent. Economists had predicted the exact same increase of 0.2 percent and an annual rate of 2.3 percent.
In particular, core consumer prices, which are stated excluding energy and food, also increased by 0.2 percent on a monthly basis and remained at 2.8 percent compared to the previous year. Experts had expected a monthly rate of 0.3 percent and an annual rate of 2.8 percent. Lower inflation pressures could indicate that the risk of a recession in the US has diminished.
Economic influences and trade policy
Another positive aspect is the agreement between the USA and China to reduce tariffs on imports for an initial period of 90 days. This measure is intended to promote economic exchange and could help to further reduce inflationary pressure. Further negotiations are planned during the 90 days, which could lead to possible long-term agreements.
These developments also reduce the need for interest rate cuts by the US Federal Reserve. Analysts at Goldman Sachs note that the rationale for rate cuts could shift from pure insurance to normalization of monetary policy.
Economists' opinions and consumer mood
The costs for services, which include housing, increased by 4.3 percent compared to the same month last year. Surveys show that consumer inflation expectations have risen from 3.3 to 4.3 percent for 2025. Experts warn that the current US president's tariff policies could further fuel inflation, with Deutsche Bank predicting that the new tariffs could contribute up to 2 percent to inflation.
While wages have recently risen by 4.1 percent, there are signs of a slowdown in the labor market. Job vacancies fell in January 2025, adding to overall uncertainty among economists.
In monetary policy, the US Federal Reserve has already entered a phase of interest rate adjustments after inflation rose above 9 percent. For the second half of 2024, the Fed plans to cut interest rates by a total of 1 percent. As of the end of January 2025, the key interest rate remained at 425 to 450 basis points, and two interest rate cuts are forecast for 2025. However, there is a certain level of skepticism: 16 percent of economists do not expect any more interest rate cuts in 2025.
As the market continues to react to the latest inflation data, it remains to be seen how the economic situation will develop in the coming months and what role the Fed's monetary policy will play in this.