What Will the #Fed Do After the Inflation Data?
The release of August inflation data in the U.S., which aligned with expectations, has reinforced the market's view that the Federal Reserve might ease its tight monetary policy. With inflation having declined for five consecutive months, it suggests that the economy is cooling, reducing the likelihood of a recession. However, core inflation remains at elevated levels, indicating that the Fed may proceed cautiously. #CPI_BTC_Watch
The probability of a 25-basis-point rate cut by the Fed has risen to 83%, reflecting market confidence that inflation is being gradually brought under control. Yet, the persistent rise in housing costs, contributing significantly to inflation, cannot be overlooked. Citibank's prediction of two 50-basis-point cuts in November and December may only materialize if we see more substantial improvement in the structural components of inflation.
The lack of reaction from #Bitcoin to the inflation data highlights that investors may not perceive these short-term macroeconomic shifts as critical to its price movements. It's likely that the crypto market may respond more to longer-term central bank policy decisions. $BTC
In summary, the Fed's approach seems likely to be gradual and measured, signaling that economic cooling will be carefully managed, with the risk of recession remaining low.
