Bessent told reporters the two sides had agreed on a 90-day pause on measures and that tariffs would come down by over 100 percentage points to 10 per cent.

Consumer prices eased 0.1 per cent last month from a year earlier, matching a 0.1 per cent drop in March and the forecast in a Reuters poll.

The cut had been widely expected, especially after a slowdown in price rises, with inflation cooling to 2.6% in the twelve months to March (from 2.8% the previous month).

“The effects on inflation could be short-lived, reflecting a one-time shift in the price level,” he said. But it is “also possible that the inflationary effects could instead be more persistent”.

US stocks moved higher Friday morning as investors digested the report. Dow rose 490 points, or 1.2%. The broader S&P 500 rose 1.15% and the tech-heavy Nasdaq Composite gained 1%.

Euro zone inflation was unchanged at 2.2% in April, missing expectations for a move lower, flash data from statistics agency Eurostat showed Friday.

Also encouragingly, inflation in the services sector slowed to 3.7 per cent in the first quarter, the lowest since the June quarter of 2022.

The Fed tracks the PCE price measures for its 2 per cent inflation target. Economists are forecasting a surge in inflation this year as the import duties raise the cost of goods.

Business groups said China has allowed some US-made pharmaceuticals to enter the country without paying the 125 per cent duties that Beijing imposed earlier in April,

The data comes ahead of the BOJ policy meeting on Apr 30 to May 1, where the central bank is widely expected to keep short-term rates steady at 0.5 per cent.

He also said he did not see the need to say he would “play hardball” with Chinese leader Xi Jinping, and that during discussions he would not raise Covid-19 – an issue that is very politically sensitive in Beijing.

Task force is collecting lists of items that could be exempted from tariffs and is asking companies to submit their own requests, according to a person with knowledge of that outreach.