On December 11, 2024, the U.S. Consumer Price Index (CPI) came in at 2.7%, as expected.
However, the inflation rate (CPI) in the U.S. ended its downward trend three months ago and has been in an upward trend for the last three months.
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Over the past three months, inflation has risen from 2.4% to 2.6%, and then to 2.7%.
On December 12, 2024, the U.S. Producer Price Index (PPI) was expected to come in at 2.6%, but it surprised the market with a 0.4% increase, reaching 3%.
There is a positive correlation between CPI and PPI, and PPI is often considered a leading indicator for CPI because price changes in the production phase can reflect in the consumption phase.
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Therefore, even if the next inflation report comes out as expected, it is likely to continue rising.
Furthermore, these figures do not reflect the real-world inflation felt by people; the actual inflation in the U.S. is likely much higher, as these figures are manipulated and adjusted to appear lower, just as they are in our country.
However, this surprise increase in PPI could raise concerns in the markets, as the effects of PPI could become more evident in CPI in the coming months. If this trend continues, the pressure on consumer prices will increase, and this could challenge the Fed’s policy of interest rate cuts.
On December 18, 2024, the Fed will announce its interest rate decision, and there is a 98% probability of a 25 basis point rate cut.
The rate cut signals that the Fed views supporting economic growth as a more immediate priority than controlling inflation. However, this decision could result in a weakening of the U.S. dollar and increased demand-driven inflationary pressures. This could create a critical window of opportunity, particularly for both the crypto markets and stock markets.
It’s likely that this rate cut, along with the surprise PPI data, will have a positive effect on the next inflation report.
Despite this, the Fed still aims to reduce inflation to 2% and keep it there. However, it seems unlikely that the Fed will achieve this goal for most of 2025.
In this case, the anticipated Mega Bull Season in crypto could be a significant indicator that its foundation is solid. Inflationary pressures and low-interest-rate policies create a strong environment for assets with limited supply like #Bitcoin (#BTC ). Moreover, the high volatility in traditional markets could accelerate investors’ movement toward cryptocurrencies as a safe haven. $BTC
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Similarly, in the stock market, we may see rises in sectors such as energy, raw materials, and finance, which can benefit from inflation. #BTCReclaims101K
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