US inflation data fell more than expected in January, according to data released by the US Bureau of Labor Statistics.
US inflation data fell
Crypto prices reacted negatively to higher-than-expected CPI data. The U.S. Bureau of Labor Statistics released January Consumer Price Index (CPI) data. The data came amid widespread expectation of a substantial drop in inflation in the coming months, with the hopes of further loosening the Fed’s monetary policy. US inflation fell to 6.4% yoy, above expectations for an annual increase of 6.2%.
January CPI was realized as 6.4%, against the 6.2% expectation, and the core CPI was realized as 5.6%, against the 5.5% expectation. This led to a slight rise in the US Dollar Index (DXY), which is currently at 102.95. However, the latest inflation figures are a welcome trend in the context of the high inflation the economy has witnessed in recent months.
With the Fed’s ultimate goal of reducing inflation below 2%, the market will expect further tightening in monetary policy. This is positive news for the crypto community in the long run, given that volatility will lead to a channeling of funds towards cryptocurrencies.
US CPI reports 6.4% inflation
Core CPI, which does not include variable prices such as gasoline and food, rose 0.3% monthly, fully in line with market forecasts. The 6.5% increase in September was the highest since August 1982.
According to the index closely monitored by the Bureau of Labor Statistics, core consumer prices have risen the least in the last 15 months. This makes it possible for the Federal Reserve to further reduce the size of the interest rates that it has applied in the country for the past few months.
In the spring of 2021, a number of factors combined triggered a spike in inflation, causing price increases to reach their highest levels since the stagflation era of the early 1980s.
The pandemic has created an imbalance of supply and demand, Russia’s invasion of Ukraine has affected energy prices, and billions of dollars in fiscal and monetary stimulus has resulted in a bountiful hunt for fewer commodities caught in supply chain problems.
market response
Equity futures edged higher as January’s consumer pricing report supported experts’ forecasts for a reduction in inflationary pressures. Dow Jones Industrial Average futures contracts were up 0.26%, with 79 points, Nasdaq 100 futures were up 0.32% and S&P 500 futures were up 0.20%.
The cryptocurrency market, on the other hand, has experienced conflicting reactions. Bitcoin (BTC), which has the highest market capitalization, is currently trading at $21,660, representing a 0.41% drop in the last hour, up 0.35% in the last 24 hours, according to cryptokoin.com data. However, Ethereum (ETH) price is trading at $1,515 with an instant 2% increase.
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