The next 24 hours are critical as March CPI data releases for the USA. This would be the first inflation release that might have a small hint of any changes due to the banking crisis that started within the second week of the month. Though the inflation expectations have come to a two-year low whether the actual data follows such a trend is yet to be seen.
In the last CPI data, the main elements were gasoline and rental prices. For March, the gasoline price is up by 2.4%and the rent price is up by 0.5% as compared to February.
It indicates that the inflation data might remain stronger than the estimate of a 0.2% monthly rise. And if it does come out to be higher then the odds of a 0.25% rate hike in May will increase from the current level of 71%.
But there is a chance the other elements show a bigger fall as consumer spending did see a fall during the month and even the lending data has shown a fall. Then the odds of the rate hike will fall very quickly.
Though a single data release will not turn the economy. But the stability and volatility of the financial and real world are delicate. The reaction to any surprise on either side will be swift and bigger than anticipated.