According to the June measurement of the Consumer Price Index (CPI), the inflation rate in the US declined from 4.0% in May to 3.0%, falling below expectations. However, this decline did not impact the price of Bitcoin, but it led to market movements in traditional markets. Additionally, core CPI, which excludes volatile food and energy costs, also experienced a decrease.

Inflation Data:

In June, the CPI increased from 0.1% to 0.2% on a monthly basis compared to May. However, the expectations were at 0.3%, indicating that it fell below expectations. On the other hand, the core CPI, when excluding volatile food and energy costs, showed a decrease from the previous 5.3% to 4.8%, indicating a decline in inflation. On a monthly basis, the core CPI declined from 0.4% to 0.2%, falling below expectations.

Federal Reserve and Markets:

The decrease in inflation is considered an important indicator for Federal Reserve policymakers. However, the markets and the Federal Reserve maintain expectations of an interest rate hike in the Federal Open Market Committee (FOMC) meeting scheduled for July. The CME's FedWatch tool indicates a 91.1% probability of an interest rate increase during the FOMC meeting on July 25-26.

Bitcoin and Markets:

Bitcoin showed almost no reaction to the inflation news. However, there were market movements in traditional markets. The US 10-year Treasury yield declined by 6 basis points to 3.91%, while the 2-year yield also decreased by 14 basis points to 4.73%. The dollar index fell by 0.5%, while stock index futures showed an increase of nearly 1% at the opening. $BTC #CPIData

In Summary:

The June measurement of the CPI revealed that the US inflation rate was lower than expected. The decline in the core CPI can be considered a positive sign for Federal Reserve policymakers. However, markets still anticipate an interest rate increase in the FOMC meeting scheduled for July. The price of Bitcoin remained stable, unaffected by the inflation data. #USA #UnitedStates #interest #federal

The U.S. Federal Reserve increases interest rates by 25 basis points, bringing the target rate to 5-5.25%.

Bitcoin traded around $28,500 following the announcement, relatively unchanged.

The U.S. Federal Reserve has raised the federal funds target range rate by 25 basis points to 5.5.75%. 

Wednesday’s interest rate decision was largely expected, with traders pricing in such a rise ahead of time. The Fed's statement removed language signaling further rate hikes. 

"In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments," the Fed's statement read. 

Today's release shows a softening in language compared to the March statement, when the Fed said, "The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time."

"One and done is the prediction of Fed policy based on the pricing of U.S. interest rate futures," Trakx's Ryan Shea told The Block ahead of the decision, meaning today's 25 basis point hike will mark the conclusion of the most aggressive U.S. monetary tightening cycle in 40 years.

"Given ongoing tension in the U.S. banking sector, which just claimed its third victim following JPMorgan’s acquisition of First Republic Bank this past week, investors are anticipating a fairly swift reversal in Fed policy," he added. There is a near 82% probability of a pause at the next meeting in June, according to CME's FedWatch.

Bitcoin's price was unchanged following the news, trading around $28,500.

The leading cryptocurrency by market cap slipped to about $28,200 leading up to the Fed's decision. Bitcoin has been suspect to sharp price moves over the past four months as market liquidity reached fresh lows. Liquidity refers to the depth of the market or the ability of buyers and sellers to execute trades close to the market price.

Digital asset trading firm QCP Capital said the market is currently lacking direction, and the biggest obstacle for crypto remains the U.S. dollar.

"For the USD (DXY), the key level to the topside is 102.5, where we expect a break higher to lead to a sharp correction lower in crypto," QCP's market update noted. 

The dollar tends to get stronger as the Fed increases interest rates. The DXY is trading around 101.25, having slipped to 101.08 following the announcement, according to data via TradingView.

source: theblock

image source: ai

#fomc #Fed #federal #inflation #news

Disclaimer

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.