Economists are weighing in after US consumer prices came in hotter than expected in March. The general consensus? Don’t expect rate cuts anytime soon.

“Today’s crucial CPI print has likely sealed the fate for the June FOMC meeting with a cut now very unlikely,” Seema Shah, chief global strategist at Principal Asset Management, said in reaction to the print. “This marks the third consecutive strong reading and means that the stalled disinflationary narrative can no longer be called a blip.

“In fact, even if inflation were to cool next month to a more comfortable reading, there is likely sufficient caution within the Fed now to mean that a July cut may also be a stretch — by which point, the US election will begin to intrude with Fed decision making,” Shah added.

Investors now anticipate two 25 basis point cuts this year, down from the six cuts expected at the start of the year, according to Bloomberg data.

The Consumer Price Index (CPI) rose 0.4% over the previous month and 3.5% over the prior year in March, an acceleration from February’s 3.2% annual gain in prices and higher than economists had expectations.

On a “core” basis, which strips out the more volatile costs of food and gas, prices in March climbed 0.4% over the prior month and 3.8% over last year — matching February’s data. Both measures were also higher than economist forecasts.

Ryan Sweet, chief US economist at Oxford Economics, said the hotter data may push more policymakers “into the two rate-cut camp.”

“The Fed has a bias toward cutting interest rates this year, but the strength of the labor market and recent gains in inflation are giving the central bank the wiggle room to be patient,” Sweet said. “If the Fed does not cut interest rates in June, then the window could be closed until September because there is little data released between the June and July meetings that could alter the Fed’s calculus.”

“The odds are rising that the Fed cuts rates less than 75 basis points this year,” he predicted.

But Greg Daco, chief economist at EY, cautioned investors to be patient: “I think we have to be very careful with this idea that it’s a play-by-play process.”

In an interview with Yahoo Finance, he noted that “these types of readings do still point to disinflationary pressures. It’s still moving in the right direction, and it will take time.”

Following the data’s release, markets were pricing in an 80% chance the Federal Reserve holds rates steady at its June meeting, according to data from the CME FedWatch Tool. That’s up from a roughly 40% chance the day prior.

More than half of investors are also betting the central bank to hold steady through its July meeting, with markets now largely anticipating the first cut will come in September.

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