As a seasoned researcher with years of experience in financial markets under my belt, I must say that today’s U.S. CPI data release has added another layer of intrigue to the ongoing market dance. The 2.9% annual inflation rate, while still above the Fed’s target, is a clear indication that the central bank might finally be ready to ease its monetary policy.
The price of Bitcoin experienced a positive trend due to decreasing inflation rates in the U.S., as the Consumer Price Index (CPI) dropped to 2.9%. This latest data from the U.S. Bureau of Labor Statistics indicates that inflation is cooling further. With the Producer Price Index (PPI) inflation decrease exceeding predictions, this lower CPI figure may enable the U.S. Federal Reserve to relax its monetary policies.
On Wednesday, US stock futures remained steady for Dow Jones, S&P 500, and Nasdaq Composite as investors searched for signs of moderate price rises. Meanwhile, crypto traders showed optimism before the CPI release due to a trend of buying dips, in anticipation of potential Fed interest rate cuts starting in September.
US CPI Comes In Cooler
In simple terms, the monthly inflation rate in the U.S., as measured by CPI, slightly increased by 0.2% in the latest data, compared to a 0.1% decrease in June. However, on an annual basis, the inflation rate eased from 3% in June to 2.9%.
In the past month, the core inflation decreased for a fourth straight time, now standing at 3.2%. This is the lowest level since April 2021. Compared to the previous month, the monthly core inflation rate increased slightly from 0.1% to 0.2%, but it’s still below the 0.3% recorded in the month before that.
It seems that the general decrease in various economic indicators suggests potential grounds for the Federal Reserve to lower interest rates. However, the central bank is likely to hold off on making a definitive decision until they have reviewed upcoming employment and Personal Consumption Expenditures (PCE) inflation data. The financial market currently anticipates a more significant rate cut from the Federal Reserve in September.
As an analyst, I’m observing that according to the CME FedWatch tool, there is over a 50% likelihood of a 0.5 percentage point interest rate reduction in September. Additionally, the data suggest a potential for two 0.5 percentage point reductions, or 1 full percentage point, from the Federal Reserve this year.
After the inflation data release, Bitcoin’s price experienced an additional surge, climbing by 5% over the past day. Currently, it’s being exchanged at approximately $61,403. In the same 24-hour period, the price fluctuated between a low of $58,788 and a high of $61,572. Additionally, there has been a 12% drop in trading volume over the last day.
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2024-08-14 15:47