Today's release of the May Consumer Price Index (CPI) data revealed a 3.3% year-over-year inflation growth, which was slightly below the 3.4% rate seen in April. The crypto market responded positively to this development, as the decrease in inflation raised expectations for possible interest rate reductions by the Federal Reserve in the near future.
Following the release of the May CPI data, Bitcoin saw an increase of around 2.3% in the last hour, while the top 20 cryptocurrencies in the market also experienced positive movement. Additionally, Ethereum's value rose by 2.6% during the same period, as reported by CoinGecko.
The Labor Department's data, as reported by Barron’s today, shows that inflation slowed to 0.1% in May, a decrease from the 0.3% growth recorded in April. Core CPI, which excludes volatile energy and food prices, also decreased to an annual rate of 3.5%, marking the lowest figure since April 2021.
The shelter component of the CPI has been under close scrutiny by economists and analysts due to housing costs being a persistent cause of inflationary pressure. It is widely anticipated that inflation in housing and rent will decrease in the upcoming months, leading to a reduction in overall inflation and bringing it closer to the Fed's 2% target.
Even though the CPI data is positive, it is anticipated that Federal Reserve Chair Jerome Powell will continue to be careful about the possibility of reducing rates at the upcoming FOMC meeting. The central bank is expected to highlight the robustness of the US economy and the ongoing high inflation as arguments for keeping interest rates elevated for a prolonged time.
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