In this video, Vanessa Welch, Empower vice president for financial insights, and Marta Norton, Empower chief investment strategist, review the latest Consumer Price Index report for March and how tariff changes could impact inflation and the wider economy through the lens of ongoing market volatility. Here is a transcript:

Marta Norton: Inflation's still a concern — still something that we're going to be watching — but looming larger in my mind is the growth concern.

Vanessa Welch: Good morning. I'm Vanessa Welch, joined by our chief investment strategist, Marta Norton. Marta, inflation cooled more than expected, and the numbers look encouraging on the surface, but this data only tells us part of the story.

Norton: That's right. So to your point, Vanessa, we saw headline inflation at a 2.4% year-over-year change. Core inflation — of course, that's stripping out food and energy — at a 2.8% annual range. Those numbers are below expectations.

The real question heading into this report was whether we would see any tariff impact from what was already in place, particularly around the tariffs on China. But there were no standout contributions when we're looking at areas like clothing or electronics.

One piece of frustration for consumers: food prices continuing to remain high, especially in that epicenter of pressure with the eggs. But this report, I think, is quickly going to feel like old news as we look at what the developments are on the ground.

Welch: It seems like we're not seeing much impact from tariffs at all yet. I am curious about the timing here. When do you think we'll start to see those tariffs showing up in price increases?

Norton: Well, it's an open question because there's a number of different variables — not the least of which is that companies have been preparing for tariffs, pulling imports and building up that existing inventory that could allow us some relief from prices for the foreseeable future. And companies may not be able to pass along all those price increases regardless. So expectations for the immediate future is a little bit questionable, but within a few months we may start to see some moves on the inflation front.

Welch: What's particularly interesting is the dramatic policy shift we saw yesterday. Markets had one of their most dramatic rallies in decades after President Trump announced a pause on some of his tariff plans. Marta, walk us through the relationship between inflation and trade policy — and how might yesterday's pause impact inflation in the coming months?

Norton: So the conventional wisdom is that tariffs are a cost, and companies are going to pass those costs along to consumers and they'll be hit by higher prices. But companies are getting hit with those higher costs first — and it's a question whether all the price increases that they experience are actually something that they can pass along. Our concern all along looking at this tariff situation has been what's going to happen with corporate earnings. In other words, we have some expectations for slower growth, and academic research supports this — in fact, suggesting that, yes, we can see higher inflation in a tariff era, but also slower growth. So it's possible that we will be seeing those higher prices, but maybe not to the extent expected, and we might see more of a slowdown than expected on the growth front.

Welch: It sounds like there's a delicate balance at play here, and that's the concern for the Fed, right?

Norton: That's absolutely the concern for the Fed. So if we take a look back at their most recent meeting and the summary of economic projections that they released — which is essentially their prognostications around what could happen with growth or inflation or the labor market — what you saw was a move higher in inflation but a larger hit on the growth side. That being said, the Fed has made it very clear that it doesn't want to move too soon preemptively — without clarity on what the policies are — and find itself still dealing with an inflation concern over the long term. So over the past few days, the Fed has really enforced its desire through different Fed speakers to stand pat at least for the immediate future.

Welch: Marta, let's talk a little bit about the bond market, which has been very volatile recently. How might the bond market react to today's better-than-expected inflation data?

Norton: Well, all things held equal, lower inflation is a positive for the bond market. But the bond market has actually been roiled this week, especially at the longer end. We saw pressure before Trump decided to reverse these policies. There wasn't a clear driver: Was it inflation concerns? Was it foreign buyers backing off from the bond market? Was it hedge fund trades unwinding?

Regardless, a lot of folks in the market are giving credit to the bond market for causing Trump to put this pause in place.

Welch: Beyond inflation, Marta, what broader economic impacts might these tariffs have, do you think?

Norton: Okay, so inflation's still a concern — still something that we're going to be watching. But looming larger in my mind is the growth concern, and that's something that we're going to be watching very closely — particularly looking at how corporations are responding to the pressure that they're in. And then without clarity on the tariff policy front, there's still this matter of uncertainty that's a bit of an overhang when it comes to how corporations are making business decisions.

Welch: Marta, thank you for your insights and for your perspective as we continue to navigate this uncertainty. You always remind us we've got to stay informed without reacting and making emotional decisions based on the headlines.

Stay with us as we continue to bring you fast responses on breaking market news, and be on the lookout next week for Marta's latest analysis on equity market valuations. Have a great rest of your week.