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US CPI Data: The crypto prices reacted negatively to the higher than expected CPI data, although there is a reversal after an hour or so. The U.S. Bureau of Labor Statistics released the Consumer Price Index (CPI) data for the month of January. The data came amid widespread anticipation for significant reduction in inflation, in hopes of further loosening of monetary policy by the Fed in the months to come. The US inflation fell to 6.4%, higher than expectations of 6.2% rise year-over-year.
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The January inflation numbers came out to be disappointing for traders who were expecting the index to be at 6.2%. However, on a positive note, the latest fall in inflation marks such a decline for the seventh month in a row, although it misses the market expectation. A summary from the US agency said CPI for urban consumers rose 0.5 percent in January on a seasonally adjusted basis. This is a significant rise compared to an increase of 0.1 percent for the same indicator in December.
Higher Than Expected Inflation Data
The headline CPI for January came out at 6.4% against an expectation of 6.2%, while the core CPI stood at 5.6%, against an expectation of 5.5%. This led to a light rise in the U.S. Dollar Index (DXY), which is currently at 102.95. The latest inflation numbers are however a welcome trend in context of high inflation the economy witnessed in recent months. With the Fed’s final target at lowering inflation to below 2%, the market will expect further tightening in monetary policy.
In a way this is a positive trend for the crypto community in the long term, considering volatility will lead to diversion of funds to cryptocurrencies. In the next few months, traders would hedge their bets keeping in mind the US Fed’s focus of controlling inflation. The Bitcoin price saw a decline as a result of higher than expected price rise figures. As of writing, BTC price stands at $22,271, up 3% in the last 24 hours, according to CoinGape price tracker.
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It remains to be seen if a fading effect on the markets will lead to rise in confidence in the crypto assets. In the last quarter, significant volatility surrounded the inflation data release event, more than any other macro announcement.
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