The U.S. Bureau of Labor Statistics announced the consumer price index (CPI) inflation data for January showing that inflation came in at 3.1%. The number was lower than the December inflation print of 3.4% but was still higher than overall market estimates of 2.9%. The data has also shifted expectations of a rate cut by the US Fed to July from an earlier expectation of June.
US core CPI eases, beats market estimates
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased by 3.1% before seasonal adjustment.
Economists polled by Reuters expected consumer inflation to rise 2.9% annually in January after 3.4% growth in December. The core figure increased 0.4% month over month in January when volatile food and energy components were excluded, as opposed to the predicted 0.3% increase. It increased 3.9% annually as opposed to the projected 3.7% growth.
Investors have been speculating about how quickly and sharply the Fed and other institutions may lower interest rates since the start of the year. The U.S. CPI’s surprise increase today may provide the Fed further justification to maintain current rates rather than lower them in the future. At present, the expectations of a rate cut by the US Fed have been shifted to July from an earlier expectation of June. The change hints that the Fed’s all-time high-interest rates might stay higher for longer for the first half of this year.
Bitcoin slips post inflation data
An important tool that investors use to evaluate investments has always been the Federal Reserve’s rate decisions. The devaluation of government securities caused by lower interest rates often makes assets like cryptocurrency more appealing. Today’s hotter-than-expected data signals an upcoming volatility in global financial markets, possibly keeping crypto markets pressured as well.
Bitcoin prices took a fall after the US CPI data release. At the time of writing, the OG-crypto currency inched lower to $49,480.99, after previously standing at $49,536 a piece.
Bitcoin’s movement was in tandem with larger financial markets with Dow e-minis being down 309 points, or 0.79%, S&P 500 e-minis down 56.25 points, or 1.12%, and Nasdaq 100 e-minis plunging 276.25 points or 1.54%.
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