A decline in consumer inflation sparks optimism, yet the crypto market remains largely unaffected by the development.
The U.S. Consumer Price Index (CPI) has reached its two-year low following the latest release on July 12. According to the U.S. Bureau of Labor Statistics, the CPI in June experienced a mere 3% increase compared to the previous year. This drop can be attributed to subdued consumer costs and the high base effect from the corresponding period last year.
Main Breakdowns:
- The CPI in June increased by only 3%, which is a two-year low.
- Although inflation is still high at 3%, it is above the Fed’s mandated range, potentially leading to more rate hikes.
- The latest figures for year-on-year and month-over-month changes in CPI fell below projected estimates, indicating progress in managing inflationary pressures.
- The core CPI, excluding food and energy prices, rose by 4.8% year-on-year, still above the desired 2% target set by the Federal Reserve.
- Fed official Barkin warns that inflation is still very high and poses a significant challenge, casting doubts on the future trajectory of prices.
The crypto market has shown a relatively limited reaction to the decline in consumer inflation so far. However, market observers anticipate a potential bounce in the market in the near future with the cooling off of inflation. The upcoming Federal Open Market Committee (FOMC) meeting is an event with implications for both traditional and digital markets, but there are concerns about whether the Fed’s decisions could contribute positively to the crypto market sentiment.
Hot Take:
While a decline in consumer inflation may spark optimism, it remains uncertain how it will impact the crypto market. The limited reaction so far suggests that other factors are currently influencing cryptocurrency prices. The upcoming FOMC meeting will be closely watched for any potential shifts in market sentiment. Overall, the crypto market’s response to the decline in consumer inflation remains to be seen.
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