The reduction in broad inflation is quite significant, reaching 2.5% directly, even lower than market expectations. For most ordinary investors, this is considered a decline in inflation, which is a good thing. However, the monthly core month-on-month growth exceeded expectations and the previous value, indicating that core inflation has been repeated. In this way, the probability of the Fed cutting interest rates by 50 basis points is greatly reduced. The 50 basis points mentioned here refer to the decline caused by inflation, not the decline caused by recession. This data is also within the expected range.
Both the core annual rate and the CPI monthly rate are in line with market expectations, and there is no need to say more about this. Now it depends on the game of investors after the opening of the US stock market. Whether they think that the benefits of a sharp decline in CPI are more prominent, or whether they think that the impact of repeated inflation is better, this will be decided by the market.
This CPI data increases the possibility of the Fed cutting interest rates by 25 basis points in September. This is not a bad thing. After all, it is unlikely that the interest rate cut caused by inflation will reach 50 basis points, and there is no problem with the economy. 25 basis points should be the most appropriate.
Why did BTC fall more? If the interest rate cuts increase investors' risk appetite, then the first thing to be considered should be US stocks, not cryptocurrencies. If the inflation rises and investors are ready to hedge, then AI should be the first thing to be considered, not cryptocurrencies.
It can be said that "when the economy is prosperous, cryptocurrencies suffer; when the economy is dead, cryptocurrencies suffer." Regardless of whether the economic situation is prosperous or dead, for now, the demand for cryptocurrencies is still low, and US stocks are still the first choice. But as long as US stocks perform well, cryptocurrencies will not be too bad.
