U.S. inflation fell slightly in April, falling below expectations, according to the Bureau of Labor Statistics. The Headline Consumer Price Index (CPI) rose 0.2% a month compared to the projected 0.3%. Year-on-year, inflation also opposes economists’ forecasts of 2.4% to 2.3% of CPI, indicating that there are fewer inflation scenarios than previously imagined.
The core CPI, which excludes food and energy, rose 0.2% in April (Mom). However, the core CPI from the previous year is stable at 2.8%, higher than the Federal Reserve’s 2% target. These figures updated the Fed’s demand to lower interest rates. This is a move that can support assets such as Bitcoin and altcoin. Bitcoin and Ethereum, trading at $103,693 and $2,548, respectively, remained in their position after the data was released.
The cryptocurrency market was barely affected after the announcement, with a total market capitalization of $3.3 trillion. Analysts often think Bitcoin’s performance is a reflection of the volatility of the broader market. The calm trade tensions have led investors to find tips on the future of interest rates and their impact on the crypto market.
Meanwhile, the Federal Reserve kept the fees the same. However, it warned that the introduction of tariffs could lead to higher inflation. In a statement by Fed Chair Jerome Powell, the bank will observe the impact of tariffs before making a decision. Central bank stances on inflation and tariffs continue to shape market sentiment, especially for assets such as Bitcoin, which are covered in lower richer landscapes.
The impact of inflation on interest rate reductions
Wall Street experts have shown that expectations for speed reductions have been declining recently. Economist Jim Bianco noted that the chances of interest rate cuts in June are just 8%. The odds for the July cuts are now 35%, but the odds for the September cuts for the interest rate cuts fell from 100% to 66%.
Once inflation drops further and tariffs are eliminated, it could be cut as early as July. Bitcoin has historically worked well during the pandemic and again in 2023 when interest rates were cut or when interest rate cuts were expected.
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