Although US headline consumer prices increased by a slightly smaller than expected 0.2% m/m in March (the consensus forecast was 0.3% m/m), there are now clear signs of a firming in underlying inflation.
Maybe not enough of a firming yet to make Fed officials "reasonably confident" that inflation will climb back to the 2% target over the medium-term. But the slump in energy prices clearly hasn't triggered a wider deflationary spiral in the US.
"For the Fed, core inflation edged up to 1.8%, from 1.7%. That still leaves it a little bit below the Fed's 2% target. But the three-month annualised core rate climbed to 2.3%. Moreover, if the core rate is that close to target when it is being constrained by the indirect impact of lower energy prices and the stronger dollar, it could get much higher when those transitory effects fade next year." notes Capital Economics in a report
