Monthly CPI Outlook: Inflation Path and Rate Cut Implications

As we head into this month's CPI release, here's the broader inflation context traders need to understand: **The "last mile" problem:** Inflation dropped from 9% to 3.5% relatively smoothly as pandemic distortions unwound. The drop from 3.5% to 2.0% has proven far more difficult because: 1. Shelter costs are sticky — housing markets don't reprice overnight 2. Services inflation driven by wage growth is persistent 3. Supply chains have largely normalized — no more easy base effects **Market implications for the next 3 months:** - If CPI stays above 3.2%: No Fed cut before Q4 2025 → USD stays supported, gold under pressure - If CPI drops to 2.8%: June/September cut in play → USD weakens, gold rallies, equities up - If CPI re-accelerates to 3.8%+: Rate hike risk returns → Major risk-off event Base case: CPI between 3.0–3.4% through Q2, first cut September 2025. What's your CPI forecast for this month's release?