Goldman still expects U.S. inflation to fall significantly as markets alarmed by recent rise

Goldman Sachs still expects stubbornly high U.S. inflation to ease over the coming months, despite investors slashing bets for Federal Reserve interest rate cuts, after yet another print showed that consumer prices remain sticky.

The consumer price index accelerated at a faster-than-expected pace in March, according to data published Wednesday by the Labor Department's Bureau of Labor Statistics.

The CPI, a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%. This was an acceleration from the 3.2% hike jotted in February.

The report roiled investor confidence in the Fed's rate-cut outlook, sent financial markets into retreat and prompted Treasury yields to spike.

Traders now anticipate an initial rate reduction from the U.S. central bank in September, following months of penciling in the June meeting as the likely start of Fed policy easing.

In the Goldman Sachs view, the U.S. CPI will fall back to 2.4% this year, down from the current annualized rate of 3.5%.

"The problem is that you have certain parts of the inflation bucket right now that are continuing to push things up," Christian Mueller-Glissmann, head of asset allocation research at Goldman Sachs, told CNBC's "Street Signs Europe" on Thursday.

"In the last print, it was the transportation. We obviously have oil prices currently going up, and that's certainly something that has been a bit stronger than what we initially anticipated," Mueller-Glissmann said.

He added that the inflationary impact of rising oil prices will likely be limited, because the bank expects that OPEC will eventually bring spare capacity online.

Mueller-Glissmann said that the normalization of wage inflation was one of the