It may seem like a strange concept to link the price of gas to interest rates... We've all been feeling the squeeze from inflation. And even though the inflation rate might not be as high as it was back in 2022, that doesn't mean prices of things in general are falling to where they were years ago.

Note from Vic: Today, we're introducing the newest member of the Chaikin Analytics team... Ethan Goldman is joining us as a junior analyst. And he'll be working closely with our founder Marc Chaikin, myself (Editorial Director Vic Lederman), and others in our firm. Now, I'll note that Ethan comes to us as a bit of a "blank slate." He's an outsider to the world of finance. But as you'll see, he has both the attitude and the aptitude to share insightful analysis. Both Marc and I are excited to have Ethan on the team. And we're eager to see him grow and explore the world of finance with us. So today, we'll turn the Chaikin PowerFeed over to Ethan... Gas Prices Don't Seem to Matter to the Federal Reserve By Ethan Goldman, junior analyst, Chaikin Analytics It may seem like a strange concept to link the price of gas to interest rates... We've all been feeling the squeeze from inflation. And even though the inflation rate might not be as high as it was back in 2022, that doesn't mean prices of things in general are falling to where they were years ago. Based on the most recent Consumer Price Index ("CPI"), inflation is currently at 2.4%. However, one notable outlier is gas... In fact, we know from the U.S. Bureau of Labor Statistics ("BLS") that gas prices are the most volatile component of the CPI. Now, CPI is important. It's a huge part of how the Federal Reserve decides to adjust interest rates. And the Fed aims for an inflation rate of 2%. Rising CPI means inflation is high – which can lead to the Fed raising interest rates. On the other hand, falling CPI means inflation is cooling. That can lead to interest-rate cuts. And you've likely seen on the news that President Donald Trump is calling for rate cuts. So, does the volatility of gasoline mean something in a larger sense? Obviously, businesses and the president would like lower rates. And gas prices have tumbled in recent weeks. That's leading some folks to hope that a rate cut is around the corner. But the data shows that this isn't likely to happen... Recommended Links: What You Do in the Next 24 Hours Is Critical Over Eric Wade's 30-year career, he has identified ONE specific strategy that shines when markets are caught in a trade war (and it works whether the market is rising or crashing). It's not stocks, options, futures, gold, real estate, or bonds... but if you act today, this could help you potentially see a series of 1,000%-plus gains regardless of what the market does next. See this time-sensitive market update here. World Economic Forum: 'Arguably the Most Exciting Human Discovery Since Fire' Sam Altman, Bill Gates, and Mark Zuckerberg are all investing vast sums of money into a radical technology. According to Bloomberg, this could become 10 times bigger than AI, quantum computing, electric vehicles, cryptocurrencies, and robotics combined. And one stock is at the center of it all. Click here to access its name and ticker symbol – for FREE. Gasoline Inflation Is Nowhere Near 2022 Levels We can see that by looking at the components of CPI... The chart below shows the inflation rates for these components. Blue is the inflation of food. Green is anything that isn't food or energy. As you can see, these columns are higher. The black one, which is energy, sinks into negative territory. Meanwhile, red is the average of them all. Take a look... You'll notice immediately that energy hasn't dragged down the inflation rate of all items. This is due to a concept known as "relative importance." Like a weighted percentage, it tells the weight a certain value adds to the whole. Inflation would fall below that Fed goal of 2% without it. That isn't reality, though... You see, the BLS also tells us the general weighting of the values that influence inflation. The "services less energy services" category is the heaviest, of course. Medical expenses and shelter are also in that category. It makes up more than 60% of the inflation rate. That works out to roughly 1.5% of the 2.4% inflation rate over the past year. But gas is nowhere to be found there. Instead, it sits in the "energy commodities" category with fuel oil. "Energy commodities" weighs in at a measly 3.19% of the inflation rate. Put simply, that value doesn't alter the total inflation rate much. That's true despite the energy category holding a negative value in the latest CPI. All that doesn't even begin to scratch the surface of what happened in early 2022... In February 2022, the inflation rate for gas was 38%. It then went higher – peaking at about 60% that June. The Fed had interest rates at around a quarter of a percentage point until March 2022. Then, rates went up steadily until this past September. They peaked at a target range of 5.25% to 5.5%.  Gasoline's inflation rate in 2022 could have contributed to the Fed raising interest rates. But the inflation rate of gas was staggeringly high back then. Today, we're seeing a minor amount of deflation in gas prices. And since this past September, three rate cuts have brought the target range for rates down to 4.25% to 4.5%.  The next chance the Fed will have to change interest rates will be during its May meeting. But based on CME Group's FedWatch tool, most traders aren't expecting a cut. As of earlier this morning, the tool pointed to a roughly 30% chance of a cut at that meeting. Maybe if gasoline's impact on the total inflation rate grows drastically again, it could serve as a better indicator. But until then, it's just another uncertain expenditure in our daily lives. Good investing, Ethan Goldman Industry Focus Innovative Technology Services 8 83 5 Over the past 6 months, the Innovative Technology subsector (XITK) has outperformed the S&P 500 by +4.69%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. 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